When a Firm Decided to Change Its Method of Depreciation

question 39

Multiple Choice

When a firm decided to change its method of depreciation from the straight-line method to an accelerated method,in Year 8,it discovered that the effect of the change on total depreciation expense for all years affected was as follows.For all years prior to year 8,the depreciation was $50,000 in total.For year 8 only,the depreciation increased by $11,000. Ignoring taxes,Year 8 income is decreased by what amount,and in what classification,as a result of the accounting change? $$\begin{array} { | r | r | r | } \hline & \begin{array} { c } \text { Income from } \\\text { continuing operations }\end{array} & \text { Net income } \\\hline 1 & \$ 11,000 & \$ 0 \\\hline 2 & \$ 11,000 & \$ 11,000 \\\hline 3 & \$ 61,000 & \$ 0 \\\hline 4 & \$ 0 & \$ 51,000 \\\hline\end{array}$$

• A)Choice 1
• B)Choice 2
• C)Choice 3
• D)Choice 4

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Definitions:

Personal Hygiene

Practices and habits that are intended to care for one's bodily health and well-being, through cleanliness.

Macroeconomics

A branch of economics dealing with the structure, performance, behavior, and decision-making of an economy as a whole, rather than individual markets.

Marginal Products

The additional output that is produced as a result of adding one more unit of a particular input while holding other inputs constant.

Low-productivity Workers

Refers to employees who have below-average output per unit of input, often due to lack of skills, motivation, or resources.