A company changes from the straight-line method to an accelerated method of calculating depreciation, which will be similar to the method used for tax purposes. The entry to record this change will include a
A) credit to Accumulated Depreciation.
B) debit to Retained Earnings in the amount of the difference on prior years.
C) debit to Deferred Tax Asset.
D) credit to Deferred Tax Liability.

Question

Quizplus · Accepted Answer

When switching from straight-line method to an accelerated method, the company will need to adjust their Accumulated Depreciation account to reflect the change in depreciation expense. Therefore, the entry to record this change will include a credit to Accumulated Depreciation. Options B, C, and D are not relevant to this transaction.

A Company Changes from the Straight-Line Method to an Accelerated