Hi everyone,
I am having some trouble with the wording of this question. I understand the answer, but for some reason I still think the answer is B. Here is my view: is there is an asset write-down, it’s true that the current year’s expense will increase, which means the current expense is *understated* (compared to the new, adjusted, higher expense from the write-down), and therefore there will be a decrease in the future year’s depreciation, which means the currently estimated future year’s expense (due to lower depreciation from the the newly adjusted lower amount) is *too high*.
So the asset write-down *does* indicate an understatement of C, and overstatement of B, therefore my logic says the answer is B.
Please help. Thanks!