Lockenberg Company changed the amortization method (a change in accounting principle) for its fleet of delivery trucks.The accumulated net after-tax effect was an increase of prior period's net income by $84,300.This adjustment will have the following effect on Lockenberg's current year net income:
A)Current year's net income will be unaffected
B)Current year's net income will increase by $84,300
C)Current year's net income will increase by $84,300 minus the income tax effect
D)Current year's net income will decrease by $84,300

Question

Quizplus · Accepted Answer

Changing the amortization method is a change in accounting principle which affects the prior period's net income, but has no effect on the current year's net income. Therefore, the answer is A.

Lockenberg Company Changed the Amortization Method (A Change in Accounting