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

question 89

Multiple Choice

The method of depreciation was changed from the double-declining-balance method to the straight-line method in fiscal 2013. A machine was purchased on January 1, 2011, 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 2011. What is the appropriate accounting for fiscal 2011?

• 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 2011.

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Definitions:

Tobacco Companies

Firms involved in the manufacturing, marketing, and distribution of tobacco and tobacco-related products, such as cigarettes and cigars.

Issues Management

The proactive process of identifying, evaluating, and responding to public policy, social, and ethical issues that could impact an organization.

Systematic Preparedness

The organized and planned set of actions and measures taken to be ready for known risks and unforeseen events, minimizing impact and enhancing response.

Coalition Building

the process of forming alliances or groups among individuals or organizations with a common goal or interest.