Due to an Error in Computing Depreciation Expense, Prewitt Corporation

Multiple Choice

Due to an error in computing depreciation expense, Prewitt Corporation overstated accumulated depreciation by $20 million as of December 31, 2018. Prewitt has a tax rate of 30%. Prewitt's retained earnings as of December 31, 2018, would be:

A) Overstated by $14 million.
B) Understated by $14 million.
C) Overstated by $6 million.
D) Understated by $6 million.