q 10)

On Jan 2, year 1, Elk Co. bought equipment for $270,000. The cost was erroneously recorded as an expense. The equipment has a 9 year useful life and estimated to have $18,000 of residual value. Elk Co. uses the straight line method to depreciate it's PP&E. This error wasn't discovered until May 1, Year 3, and the appropriate corrections were made. Ignore income tax considerations. Elk Co.'s statement of income for the year ended December 31, year 3 would show the "cumulative effect" of this error in the amount of: 0 $242,000 5214,000 0 50 0 5186,000