Due to an error in computing depreciation expense, Prewitt Corporation overstated accumulated depreciation by $20 million as of December 31, 2013. Prewitt has a tax rate of 30%. Prewitt's retained earnings as of December 31, 2013, would be:
A)Overstated by $14 million.
B)Understated by $14 million.
C)Overstated by $6 million.
D)Understated by $6 million.

Question

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The Answer of Due to an error in computing depreciation expense, Prewitt Corporation overstated accumulated depreciation by $20 million as of December 31, 2013. Prewitt has a tax rate of 30%. Prewitt's retained earnings as of December 31, 2013, would be:
A)Overstated by $14 million.
B)Understated by $14 million.
C)Overstated by $6 million.
D)Understated by $6 million.

Due to an Error in Computing Depreciation Expense, Prewitt Corporation