Bellingham Inc

Multiple Choice

Bellingham Inc. discovered in early 2014 that it had overstated depreciation expense reported on its 2013 income statement. How would this correction of an error be handled?

A) Adjust depreciation expense for the error in 2014.
B) No adjustment needed.
C) Deduct the amount from 2014 net income.
D) Adjust the beginning of the year balance in the December 31, 2014 retained earnings statement.