Use the Following Data to Answer Questions 5 Through 9

Multiple Choice

Use the following data to answer questions 5 through 9:
Davis Company purchased a new piece of equipment on July 1, 2014 at a cost of $1,800,000. The equipment has an estimated useful life of 5 years and an estimated salvage value of $150,000. The current year end is 12/31/15. Davis records depreciation to the nearest month.
-If Davis expensed the total cost of the equipment at 7/1/14, what was the effect on 2014 and 2015 income before taxes, assuming Davis uses straight-line depreciation?

A) $1,470,000 understated and $330,000 overstated.
B) $1,620,000 understated and $180,000 overstated.
C) $1,635,000 understated and $330,000 overstated.
D) $1,800,000 understated and $180,000 overstated.