On January 1, 2012, Piper Co

question 82

Multiple Choice

On January 1, 2012, Piper Co., purchased a machine (its only depreciable asset) for $600,000. The machine has a five-year life, and no salvage value. Sum-of-the-years'-digits depreciation has been used for financial statement reporting and the elective straight-line method for income tax reporting. Effective January 1, 2015, for financial statement reporting, Piper decided to change to the straight-line method for depreciation of the machine. Assume that Piper can justify the change.Piper's income before depreciation, before income taxes, and before the cumulative effect of the accounting change (if any) , for the year ended December 31, 2015, is $500,000. The income tax rate for 2015, as well as for the years 2012-2014, is 30%. What amount should Piper report as net income for the year ended December 31, 2015?

• A) $120,000
• B) $182,000
• C) $308,000
• D) $350,000

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Definitions:

Domestic Market

The supply and demand for goods and services within a single country.

Domestic Producer Surplus

The difference between what domestic producers are willing to accept for a good and the actual price they receive, measuring their economic benefit.

Tariff

A tax imposed by a government on goods imported from another country, intended to increase the price of foreign goods and protect domestic industries.

Oranges

A type of citrus fruit known for its juicy segments and rich source of Vitamin C.