On January 2, 2018, 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, 2018, the amount of the change in accumulated depreciation is $40,000. The appropriate tax rate is 40%. The separately reported change in 2018 earnings is:
A) An increase of $40,000.
B) A decrease of $40,000.
C) An increase of $24,000.
D) None of these answer choices are correct.

Question

Quizplus · Accepted Answer

A change in depreciation method is reported prospectively. Therefore no cumulative effect of the change is reported in earnings.

On January 2, 2018, Tobias Company Began Using Straight-Line Depreciation