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NEW QUESTION: 1
On January 2, 20X5, to better reflect the variable use of its only machine, Holly, Inc. elected to change its method of depreciation from the straight-line method to the units of production method. The original cost of the machine on January 2, 20X3, was $50,000, and its estimated life was 10 years. Holly estimates that the machine's total life is 50,000 machine hours. Machine hours usage was 8,500 during 20X4 and 3,500 during 20X3.
Holly's income tax rate is 30%. Holly should report the accounting change in its 20X5 financial statements as a(n):
A. Cumulative effect of a change in accounting principle of $2,000 in its income statement.
B. Cumulative effect of a change in accounting principle of $1,400 in its income statement.
C. Adjustment to beginning retained earnings of $2,000.
D. None of the above.
Answer: D
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NEW QUESTION: 3
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Please choose the correct answer.
Response:
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Answer: C