A Client's Previous Two Years Financial Statements Understated Estimated Warranty

Multiple Choice

A client's previous two years financial statements understated estimated warranty payable by $30,000 and $50,000 respectively, both immaterial amounts. This year, the auditors estimate that the accrual is understated by an additional $60,000. In this year's audit, $55,000 represents a material amount. Assuming that the entire understatement is to be recorded based on SEC SAB 108, the decrease in this year's income due to these understatements is:

A) $0.
B) $60,000.
C) $110,000.
D) $140,000.