Asked by Chelianne Leata Miller on Jul 21, 2024
Verified
Refer to Exhibit 23-1.Assuming an income tax rate of 30%, the cumulative effect change reported in Carol's 2012 income statement would be
A) $ 0
B) $ 77, 000
C) $ 93, 333
D) $110, 000
Cumulative Effect Change
The aggregate change in a company's earnings resulting from a change in accounting principle, reported in the period in which the change is made.
- Evaluate how variations in depreciation practices influence financial statements and tax outcomes.
Verified Answer
KM
Komal mehboobJul 27, 2024
Final Answer :
A
Explanation :
The cumulative effect of a change in depreciation method is accounted for prospectively, not retrospectively. Therefore, there is no cumulative effect to be reported in the income statement for the year the change is made.
Learning Objectives
- Evaluate how variations in depreciation practices influence financial statements and tax outcomes.
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