On January 2,2012,Lynch Company acquired machinery at a cost of $800,000.This machinery was being depreciated by the double-declining-balance method over an estimated useful life of eight years,with no residual value.At the beginning of 2014,Lynch decided to change to the straight-line method of depreciation.Ignoring income tax considerations,the cumulative effect of this accounting change is
A) $0.
B) $100,000.
C) $155,556
D) $177,778

Question

Quizplus · Accepted Answer

The cumulative effect of changing depreciation methods is $0 because the change is accounted for prospectively, not retrospectively. This means that past financial statements are not revised; instead, the new method is applied to the remaining book value and useful life of the asset from the point of change forward.

On January 2,2012,Lynch Company Acquired Machinery at a Cost of $800,000.This