Company XYZ acquired a storage shed in Starkville at the beginning of the year. The machine had a 5-year useful life, a substantial salvage value, and was depreciated using the straight-line method. After 4 years, he no longer needs the shed, and sells it to Martinez Corp. at a price less than original cost but higher than current book value. Even though this is one of his PP&E items, he debited cash and credited sales revenue when he sold it to Martinez. What are the effects of this error on net income in the disposal period (NID) and assets at the end of the current period (AECP)?

a. NID is understated; AECP is understated

b. NID is understated; AECP is overstated

c. NID is overstated; AECP is overstated

d. NID is overstated; AECP is understated

e. None of the above

Please help to explain for my better understanding.