Assuming a 30 tax rate the cumulative effect of this, Ask an Expert

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On January 7, 2009, Yoder Corporation acquired machinery at a cost of $1,200,000. Yoder adopted the sum-of-the-years'-digits method of depreciation for this machine and had been recording depreciation over an estimated life of five years, with no residual value. At the beginning of 2011, a decision was made to change to the straight-line method of depreciation for this machine. Assuming a 30% tax rate, the cumulative effect of this accounting change, net of tax, is:

a. $0

b. $160,000

c. $168,000

d. $240,000

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M995941

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