A Corporation Has a Machine That Cost $100,000,with an Estimated

question 14

Multiple Choice

A corporation has a machine that cost $100,000,with an estimated useful life of 5 years and a residual value of $25,000.Immediately after the end of the second year,the company decided to change from SYD to straight-line depreciation.The entry to record the change would include an effect on accumulated depreciation which would be a:

• A) $15,000 debit.
• B) $15,000 credit.
• C) $30,000 debit.
• D) $30,000 credit.

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Definitions:

Net Income

The amount of money a company earns after deducting all its expenses, taxes, and losses from its total revenue.

Prior Period Adjustments

Prior period adjustments are corrections made to a company's financial statements for errors or omissions in previously reported periods.

Comprehensive Tax Allocation

A method of accounting that allows for the recognition of deferred tax liabilities and assets for future tax consequences of events that have been recognized in a business's financial statements or tax returns.

Deferred Method

A method of accounting where certain revenues or expenses are not recognized in the period they occur but are deferred to a later period.