O Level Accounting (7707)•7707/12/M/J/23
Explanation
Depreciation Error Overstates Profit Steps:
- Calculate correct depreciation: straight-line at 25% of 3,750.
- Calculate incorrect depreciation: at 15% of 2,250.
- Determine difference: 2,250 = $1,500 underdepreciation.
- Effect on profit: understating expense increases profit by $1,500.
Not enough information: The $1,500 increase does not match any choice exactly; ambiguous intent of "affect" (misstatement vs. correction).
Final answer: Not enough information.
Topic: Accounting for depreciation and disposal of non-current assets
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