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:

Demand Deposits

Bank accounts that allow the withdrawal of deposited money at any moment, without the need to notify the bank beforehand.

Loans

A sum of money that is borrowed, which is expected to be paid back with interest.

Bureau of Labor Statistics

A U.S. government agency that collects, processes, and disseminates essential statistical data related to labor market activity, working conditions, and price changes.

Cyclical Unemployment

The deviation of unemployment from its natural rate.