The Max Company Began Its Operations on January 1, 2014

question 124

Multiple Choice

The Max Company began its operations on January 1, 2014, and used an accelerated method of depreciation for its machinery and equipment. On January 1, 2016, Max adopted the straight-line method of depreciation. The following information is available regarding depreciation expense for each method:



What is the before-tax cumulative effect on prior years' income that would be reported as of January 1, 2016, due to changing to a different depreciation method?

• A) $0
• B) a decrease of $45,000
• C) an increase of $45,000
• D) an increase of $60,000

---

Definitions:

Democratic Party Split

Refers to divisions within the Democratic Party, often caused by ideological differences, policy disputes, or clashes between personalities, impacting party unity and electoral strategies.

Slavery In The Territories

A contentious pre-Civil War issue in the United States, centered around whether new territories should allow slavery, impacting the balance of power between free and slave states.

Popular Sovereignty

Program that allowed settlers in a disputed territory to decide the slavery issue for themselves; most closely associated with Senator Stephen A. Douglas of Illinois.

Abraham Lincoln

The 16th President of the United States, who served from 1861 until his assassination in 1865, known for leading the country during the Civil War and abolishing slavery.