A company made an error in calculating and reporting amortization expense in Year 1. The error was discovered in Year 2. The item should be reported as a prior period adjustment:
A. on the Year 1 income statement.
B. accounted for with a cumulative "catch-up" adjustment in Year 2.
C. on the Year 2 income statement.
D. on the Year 1 statement of retained earnings.
E. on the Year 2 statement of retained earnings.
Answer: E
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