Salim purchased machinery for $15,000 on 1 January 201. He decided to depreciate it using the straight

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Salim purchased machinery for $15,000 on 1 January 20–1. He decided to depreciate it using the straight line method at 10% per annum. On 31 December 20–2 he incorrectly charged depreciation using the reducing balance method at 10% per annum.

What was the effect on the profit for the year ended 31 December 20–2?

A. Overstated by $150

B. Understated by $150

C. Overstated by $1,350

D. Understated by $ 1,350

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