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Business, 28.01.2020 04:31 gamblenyny

Ali co. bought a machine on january 1, year 1, for $24,000, at which time it had an estimated useful life of 8 years, with no residual value. straight-line depreciation is used for all of ali's depreciable assets. on january 1, year 3, the machine's estimated useful life was determined to be only 6 years from the acquisition date. accordingly, the appropriate accounting change was made in year 3. the direct effects of this change were limited to the effect on depreciation and the related provision for income tax. ali's income tax rate was 40% in all the affected years. in ali's year 3 financial statements, how much should be reported as the cumulative effect on prior years because of the change in the estimated useful life of the machine?
a) $2,700
b) $2,000
c) $1,200
d) $0

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Ali co. bought a machine on january 1, year 1, for $24,000, at which time it had an estimated useful...
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