B Company Switched from the Sum-Of-The-Years-Digits Depreciation Method to Straight-Line

question 6

Multiple Choice

B Company switched from the sum-of-the-years-digits depreciation method to straight-line depreciation in 2009. The change affects machinery purchased at the beginning of 2007 at a cost of $72,000. The machinery has an estimated life of five years and an estimated residual value of $3,600. What is B's 2009 depreciation expense?

• A)$ 8,400
• B)$13,680
• C)$15,840
• D)$19,200 The depreciation prior to the change is as follows:
• Since a change in depreciation method is considered a change in accounting estimate resulting from a change in accounting principle, B reports the change prospectively, just like a change in estimate.B depreciates the remaining undepreciated cost on a S-L basis over the remaining useful life:

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Definitions:

Migration

Movement of people from one geographic area to another for the purpose of resettling.

Demographic Data

Collected statistical data about the characteristics of a population, such as age, sex, income level, and education, for analysis and policy-making.

U.S. Census Bureau

A principal agency of the U.S. Federal Statistical System responsible for producing data about the American people and economy.

Malthusian Theorem

The theory that exponential growth in population will outpace arithmetic growth in food production and other resources.