On January 2, 2009, 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, 2009, the amount of the change in accumulated depreciation is $40,000. The appropriate tax rate is 40%. The separately reported change in 2009 earnings is:

Question

Quizplus · Accepted Answer

Changes in accounting principles, such as a change in depreciation method, are handled retrospectively. The cumulative effect is adjusted in the retained earnings, not reported separately in earnings.

On January 2, 2009, Tobias Company Began Using Straight-Line Depreciation