1.On January 1, Year 7, Colorado Corp. purchased a machine having an estimated useful life of 8 years and no salvage value. The machine was depreciated by the double-declining-balance (DDB) method for both financial statement and income tax reporting. On January 1, Year 9, Colorado justifiably changed to the straight-line method for both financial statement and income tax reporting.

Accumulated depreciation at December 31, Year 8, was $525,000. If the straight-line method had been used, the accumulated depreciation at December 31, Year 8, would have been $300,000. The retroactive adjustment to the accumulated depreciation account on January 1, Year 9, as a result of the change in depreciation method is

A.

$225,000

B.

$525,000

C.

$300,000

D.

$0

2.An investor uses the equity method to account for an investment in common stock. The investors equity in the earnings of the investee is affected by

	A Change in Fair
Cash Dividends	Value of the Investees
from Investee	Common Stock

A.

Yes

Yes

B.

No

No

C.

Yes

No

D.

No

Yes