The Method of Depreciation Was Changed from the Double-Declining-Balance Method

question 47

Multiple Choice

The method of depreciation was changed from the double-declining-balance method to the straight-line method in fiscal 2019.A machine was purchased on January 1,2017,at a cost of $150,000.The machine has an estimated useful life of 10 years and a residual value of $9,000.Assume that net income before tax (NIBT) was $80,000 for fiscal 2017.What is the appropriate accounting for fiscal 2017?

• A)Retrospective adjustment and revised NIBT of $110,000.
• B)Retrospective adjustment and revised NIBT of $95,900.
• C)Retrospective adjustment and revised NIBT of $65,900.
• D)No accounting is necessary in fiscal 2017.

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Definitions:

Interest

Interest is the charge for borrowing money or the compensation paid to depositors, calculated as a percentage of the principal amount.

Compounded Monthly

A method of calculating interest in which the accrued interest is added to the principal at the end of each month, leading to interest on interest in subsequent months.

Mortgage

A loan provided by a lender or a bank that enables an individual to purchase a home or real estate, using the property itself as collateral.

Retirement Savings

Retirement savings are funds that individuals set aside during their working years to support themselves financially during retirement, often utilizing accounts like 401(k)s or IRAs.