On January 1, 2009, Piper Co

question 5

Multiple Choice

On January 1, 2009, Piper Co., purchased a machine (its only depreciable asset) for $300,000.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, 2012, 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, 2012, is $250,000.The income tax rate for 2012, as well as for the years 2009-2011, is 30%.What amount should Piper report as net income for the year ended December 31, 2012?

• A)$60,000
• B)$91,000
• C)$154,000
• D)$175,000

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Cultural Background

The cultural settings and conditions a person is raised in, including traditions, language, beliefs, and values.

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The educational history and qualifications a person holds, including degrees, certifications, and specialized training.

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The understanding that objects continue to exist even when they cannot be observed (seen, heard, touched, smelled or sensed in any way).