ABC Company attempts to manage its earnings by extending the useful life of all of its equipment. Which of the following will not be an outcome of this choice by management?
A) Income will be higher than it would have been under prior accounting methods.
B) Equipment values will be higher than they would have been without the change.
C) Depreciation expense will be lower than it would have been under prior accounting methods.
D) Depreciation expense will be higher than it would have been under prior accounting methods.

Question

Quizplus · Accepted Answer

Extending the useful life of equipment leads to lower annual depreciation expense because the cost of the equipment is spread over a longer period. This does not result in higher depreciation expense, making D the incorrect outcome.

ABC Company Attempts to Manage Its Earnings by Extending the Useful