On January 2, 2013, Tobias Company Began Using Straight-Line Depreciation

question 11

Multiple Choice

On January 2, 2013, Tobias Company began using straight-line depreciation for a certain class of assets. In the past, the company had used double-declining-balance depreciation for these assets. As of January 2, 2013, the amount of the change in accumulated depreciation is $40,000. The appropriate tax rate is 40%. The separately reported change in 2013 earnings is:

• A)An increase of $40,000.
• B)A decrease of $40,000.
• C)An increase of $24,000.
• D)None of the above is correct.

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Definitions:

Management Decisions

Choices or judgments made by the management of an organization regarding its operations, strategic direction, and allocation of resources.

Unanimous Consent

An agreement or decision made with the approval of all parties involved or present, typically within a legislative or corporate setting.

Ownership Interest

A legal or equitable claim in property, entitling the holder to a share of the asset's value, benefits, or profits.

Management Rights

The legal and practical powers that allow managers and executives to direct operations and make decisions within an organization.