The Zack Company Began Its Operations on January 1, 2010

The Zack Company began its operations on January 1, 2010, and used an accelerated method of depreciation for its machinery and equipment.On January 1, 2012, Zack adopted the straight-line method of depreciation.The following information is available regarding depreciation expense for each method: $\begin{array}{rrr}&\text { Accelerated}&\text { Straight-line}\\ \text { Year }&\text { Depreciation}&\text { Depreciatior}\\2010 & \$ 75,000 & \$ 50,000 \\2011 & 100,000 & 80,000 \\2012 & 145,000 & 130,000\end{array}$
What is the before-tax cumulative effect on prior years' income that would be reported as of January 1, 2012, due to changing to a different depreciation method?

A) $0
B) a decrease of $45, 000
C) an increase of $45, 000
D) an increase of $60, 000

Correct Answer:

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