If adjustments were not made each period, the financial results could be materially misstated. Determine the amount by which Brokeback's net income would have been understated, or overstated, had the adjustments in requirement 1 not been made. -g
Without adjustments, Brokeback’s net income would have been overstated by $7,985 (understated revenues of $7,950 and understated expenses of $15,935 = $150 + 700 + 800 + 1,600 + 2,750 + 500 + 9,435).
