The Bourbon Street Ice Cream Company discovers that depreciation expense was ove

Question

The Bourbon Street Ice Cream Company discovers that depreciation expense was overstated last year. How should this discovery be reported in the current year?

as a reduction in the current year's depreciation expense

as an increase to the retained earnings beginning balance

as a footnote only to the current year's financial statements

as a miscellaneous item in the Other Revenue/Expense section of the income statement

as a reduction in the current year's depreciation expense

as an increase to the retained earnings beginning balance

as a footnote only to the current year's financial statements

as a miscellaneous item in the Other Revenue/Expense section of the income statement

Explanation / Answer

The depreciation expense should be reported as as an increase to the retained earnings beginning balance Option B is correct

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