BC Company bought equipment on January 1, 2018, for $450,000. SDCS used the sum-of-the-years-digits method and estimated five-year useful life with no salvage value. In 2020, SDCS decided to change to the straight-line depreciation method for this asset. The following information shows the depreciation expense under the two methods for 2018 and 2019:

2018 2019

Straight-line (S.L) $90,000 $90,000

Sum-of-the-years-digits (S.Y.D) 150,000 120,000

The tax rate is 40%

The cumulative effect of this change on 2020 beginning balance of retained earnings is:

Select one:

a. $54,000

b. $90,000

c. 0

d. $180,000