In 2016, internal auditors discovered that Kawhi, Inc., had debited an expense account for the $100,000 cost of a machine purchased on January 1, 2013. The machine's useful life was expected to be 10 years with no residual value. The result of this error as of January 1, 2016 is

		assets are overstated by $100,000 and retained earnings are overstated by $100,000
		assets are overstated by $70,000 and retained earnings are overstated by $70,000
		assets are understated by $70,000 and retained earnings are understated by $70,000
		assets are overstated by $30,000 and retained earnings are overstated by $30,000
		assets are understated by $30,000 and retained earnings are understated by $30,000