A Company Has Been Using Straight-Line Depreciation Over the Last

question 137

Multiple Choice

A company has been using straight-line depreciation over the last several years,which has amounted to a total of $20,000 depreciation before tax for those past years.This year,it decided to change to units of production,which would have caused $30,000 of depreciation to be recognized in those past years,before tax.The tax rate has always been 40%.This year's depreciation under both methods is: The cumulative effect account resulting from this change will decrease net income by:

• A) $6,600.
• B) $10,000.
• C) $4,000.
• D) $6,000.