On January 1, 2012, Rabbit Corp

question 64

Multiple Choice

On January 1, 2012, Rabbit Corp.acquired machinery which it depreciated using the straight-line method with an estimated useful life of fifteen years and no residual value.On January 1, 2017, Rabbit estimated that the remaining life of this machinery was six years with no residual value.This change should be accounted for

• A)as a prior period adjustment.
• B)as the cumulative effect of a change in accounting principle in 2017.
• C)by setting future annual depreciation equal to one-sixth of the book value on January 1, 2017.
• D)by continuing to depreciate the machinery over the original fifteen year life.

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Definitions:

Environmental Audits

Evaluations conducted to assess the environmental compliance and performance of an organization or facility against regulatory standards and requirements.

Contaminated

Having been made impure or harmful by the introduction of pollutants, pathogens, or other hazardous materials.

Remediation Requirements

Regulations or directives that outline the necessary actions to correct or remedy a violation or failure to meet certain standards or conditions.

Anticipatory Breach

An advance determination that a party will not perform his or her part of a contract when the time for performance arrives.