On the 23 December 20X9, when engaged in preparing for the 20X9 fiscal year-end, the chief accountant of Smith Ltd. discovered an accounting error in the 20X7 statements.

Inventory purchases of $200,000 had inadvertently been charged to equipment, a capital asset account, and had been amortized by 20% for 20X7 and 20X8. The accounting amortization rate is the same for CCA purposes. The ending and beginning inventories had been properly stated.

The company's tax rate is 30%.

Calculate the before tax earnings correction.	Answer 1Choose...84,000 understatement140,000 understatement120,000 overstatement200,000 overstatement84,000 overstatement120,000 understatement36,000 understatement200,000 understatement36,000 overstatement140,000 overstatement
Calculate the after tax earnings correction.	Answer 2Choose...84,000 understatement140,000 understatement120,000 overstatement200,000 overstatement84,000 overstatement120,000 understatement36,000 understatement200,000 understatement36,000 overstatement140,000 overstatement