Wildhorse Company purchased equipment that cost $3405000 on January 1, 2020. The entire cost was recorded as an expense. The equipment had a 9-year life and a $136200 residual value. Wildhorse uses the straight-line method to account for depreciation expense. The error was discovered on December 10, 2022. Wildhorse is subject to a 40% tax rate.

Wildhorse's net income for the year ended December 31, 2020, was understated by

$1825080.

$2043000.

$3405000.

$3041800.