Use the Following Information for Questions

question 27

Multiple Choice

Use the following information for questions.
Minor Corp.purchased a machine on January 1, 2014, for $600,000.The machine is being depreciated on a straight-line basis, using an estimated useful life of six years and no residual value.On January 1, 2017, Minor determined, as a result of additional information, that the machine had an estimated useful life of eight years from the date of acquisition with no residual value.An accounting change was made in 2017 to reflect this additional information.
-Assuming that the direct effects of this change are limited to the effect on depreciation and the related tax provision, and that the income tax rate for all years since the machine was purchased was 30%, what should be reported in the income statement for calendar 2017 as the cumulative effect on prior years of changing the estimated useful life of the machine?

• A)$0
• B)$40,000
• C)$60,000
• D)$210,000

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Definitions:

Recall

The cognitive process of retrieving information from memory, allowing for the conscious recollection of past experiences and knowledge.

Recognition

The cognitive process of identifying information that has been previously learned or experienced.

Primacy Effect

The tendency to remember items at the beginning of a list better than those in the middle or at the end.

Emotional Impact

The intense effect an event, experience, or information can have on a person’s feelings or emotions.