Paper 1 May/June 2003 Accounting (9706/12) A Level

The financial year of a business ends on 31 December. At the beginning of the financial year, the
following payments were made in respect of a new machine.
It was discovered that the installation cost had been incorrectly treated as an expense. It is the
policy of the business to depreciate machinery at 20% per annum using the straight-line method.
What was the effect of this error on the profit for the year ended 31 December?