A company has been using straight-line depreciation over the last several years, which has amounted to a total of $20,000 depreciation before tax for those past years.This year, it decided to change to units of production, which would have caused $30,000 of depreciation to be recognized in those past years, before tax.The tax rate has always been 40%.This year's depreciation under both methods is: Straight-Line = $5,000
Units of Production = $6,000
The cumulative effect account resulting from this change will decrease net income by:

Question

Quizplus · Accepted Answer

The Answer of A company has been using straight-line depreciation over the last several years, which has amounted to a total of $20,000 depreciation before tax for those past years.This year, it decided to change to units of production, which would have caused $30,000 of depreciation to be recognized in those past years, before tax.The tax rate has always been 40%.This year's depreciation under both methods is: Straight-Line = $5,000
Units of Production = $6,000
The cumulative effect account resulting from this change will decrease net income by:

A Company Has Been Using Straight-Line Depreciation Over the Last