A Company Changes Its Depreciation Method from an Accelerated System

question 76

Multiple Choice

A company changes its depreciation method from an accelerated system to straight line. Which of the following would normally be true?
I. The change would be discussed in the auditor's letter.
II. The cumulative effect of the change would appear net of tax on the income statement.
III. The change would appear in cash flow from operations as a cash inflow.
IV. The change would be mentioned in the footnotes.

• A) I, II, III and IV
• B) I, II and III
• C) II and IV
• D) I, II and IV

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Definitions:

Temperature Increase

A rise in the heat energy reflected in an environment or substance, often discussed in relation to global warming.

Mafic Magma

Molten rock rich in magnesium and iron, forming dark-colored minerals and volcanic rocks.

Continental Crust

The thick, generally granitic part of the Earth's crust that forms the large land masses or continents, distinct from the denser, basaltic oceanic crust.

Cooling History

The record of the cooling and solidification of magma or lava, which informs geologists about the thermal and crystallization processes of igneous rocks.