Multiple Choice
During 2016, Dragon Company determined, based on new information, that equipment previously depreciated using a ten-year life and a salvage value of $100,000 had a total estimated life of only six years and a salvage value of $50,000. The equipment was acquired on January 1, 2014 at a cost of $600,000, and was depreciated using the straight-line method. Dragon made an accounting change in 2016 to reflect this additional information, and the change was approved by the IRS. Dragon has an income tax rate of 30%. Assuming Dragon's income before depreciation, before income taxes, and before any retroactive effect of the accounting change (if any) for the year ended December 31, 2016, was $180,000, Dragon's net income for 2016 should be
A) $80,000
B) $67,500
C) $56,000
D) $47,250
Correct Answer:
Verified
Correct Answer:
Verified
Q15: Which of the following changes would normally
Q37: Disadvantages of using the retrospective application method
Q87: Explain the direct and indirect effects of
Q91: An advantage of retrospective adjustment method is
Q104: On January 1, 2014, Suzanne Company purchased
Q110: In Western reviewed their estimated warranty costs
Q111: Exhibit 22-4 Barbara Company's year-end December 31,
Q112: On January 1, 2014, Tessa loaned
Q114: Shelley Construction began operations in 2014 and
Q118: Provide three examples of changes in principle.