During 2016, Dragon Company Determined, Based on New Information, That

question 109

Multiple Choice

During 2016, Dragon Company determined, based on new information, that equipment previously depreciated using a ten-year life and a salvage value of $100,000 had a total estimated life of only six years and a salvage value of $50,000. The equipment was acquired on January 1, 2014 at a cost of $600,000, and was depreciated using the straight-line method. Dragon made an accounting change in 2016 to reflect this additional information, and the change was approved by the IRS. Dragon has an income tax rate of 30%. Assuming Dragon's income before depreciation, before income taxes, and before any retroactive effect of the accounting change (if any) for the year ended December 31, 2016, was $180,000, Dragon's net income for 2016 should be

• A) $80,000
• B) $67,500
• C) $56,000
• D) $47,250

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Definitions:

Kelly's Theory

A psychological theory developed by George Kelly, emphasizing personal constructs as the primary way individuals understand the world.

Psychosocial Stages

Refers to Erik Erikson's theory which outlines eight stages of psychological development that individuals pass through from infancy to adulthood, each characterized by a different psychological challenge or conflict.

Erikson's Psychosocial

A theory formulated by Erik Erikson, describing eight stages of human development, each characterized by a different psychological crisis that needs resolution.

Motorcycle Fatalities

The number of deaths resulting from motorcycle accidents.