B Company switched from the sum-of-the-years-digits depreciation method to straight-line depreciation in 2018. The change affects machinery purchased at the beginning of 2016 at a cost of $72,000. The machinery has an estimated life of five years and an estimated residual value of $3,600. What is B's 2018 depreciation expense?
A) $9,120.
B) $13,680.
C) $15,840.
D) $19,200.

Question

Quizplus · Accepted Answer

The depreciation prior to the change is as follows: 11ea937b_358a_2de7_a419_256565fadc93_TB2599_00 Since a change in depreciation method is considered a change in accounting estimate resulting from a change in accounting principle, B reports the change prospectively, just like a change in estimate. B depreciates the remaining undepreciated cost on a S-L basis over the remaining useful life: 11ea937b_358a_2de8_a419_572a859d170c_TB2599_00

B Company Switched from the Sum-Of-The-Years-Digits Depreciation Method to Straight-Line