Company ABC acquired a machine at the beginning of the year. The machine had a 6-year useful life. He expensed the entire acquisition cost in the current year. His error has what effect on current period net income (NI) and retained earnings at the end of the 4th year (RE4)?

a. NI is understated; RE4 is understated

b. NI is understated; RE4 is correct

c. NI is overstated; RE4 is correct

d. NI is overstated; RE4 is understated

e. None of the above

Please help to explain for my better understanding.