Error in asset account due to misclassification of repairs

Steps:

• Machinery account balance includes cost of $20,000 plus erroneous$2,000 debit for repairs, overstating the asset by $2,000.
• Repairs should be expensed, not capitalized in the machinery account.
• Depreciation of $3,000 is correctly recorded in the provision account and does not affect the machinery account error.
• The error amount is solely the misdebited repairs value.

Why B is correct:

• Under accounting principles, repairs are revenue expenditures debited to expense, not added to fixed asset cost; thus, the $2,000 error overstates the machinery balance.

Why the others are wrong:

• A: $1,000 has no basis in the given figures or calculations.
• C: $3,000 reflects depreciation, which is properly provisioned separately.
• D: $5,000 incorrectly combines repairs and depreciation.

Final answer: B