It has been discovered that ABC Industrials has been capitalizing costs which should have been classified as expenses. What would have been the effect of this practice?

A. No effect on net income but a balance sheet impact to the asset values.

B. No impact if the costs are written off shortly after the transaction takes place.

C. Nothing. Is just adopting a practice mostly found in large, well-established companies.

D. Increasing net income by the same amount of the capitalized costs.