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Arena, Inc. uses straight-line depreciation for its equipment. Arena purchased an equipment for $300,000 and estimated its useful life at 8 years, and the residual
Arena, Inc. uses straight-line depreciation for its equipment. Arena purchased an equipment for $300,000 and estimated its useful life at 8 years, and the residual value at $50,000. The bookkeeper incorrectly estimated the residual value to be $5,000. What is the impact of the error on the operating income and the book value of the asset for the first year? Both Operating income and Book Value will be overstated. Book Value will be understated and operating income will be overstated. O Both Operating income and Book Value will be understated. Book Value will be overstated and operating income will be understated
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