Laxpayer has consistently but incorrectly used an allowance for bad debts. At the beginning of the year, the balance in the allowance account is ( $ 90,000 ). a. If the IRS examines the taxpayer's return and requires the taxpayer to change accounting methods, the taxpayer will be required to recognize an additional ( $ 90,000 ) of income (one-half in the current year and one-half in the following year) as the adjustment due to the change in accounting methods. b. If the taxpayer voluntarily changes methods, the ( $ 90,000 ) adjustment can be spread over the current and three following years. c. If the taxpayer voluntarily changes methods, the ( $ 90,000 ) reserve can be used to absorb bad debts until the account balance is zero. d. If the IRS examines the taxpayer's return, no adjustment to the reserve account will be required if the balance is consistent with prior bad debt experience.

year, the balance consistently but incorrectly used an allowance for bad debts. At the beginning of the a. If the IRS exalo in the allowance account is $90,000. the taxpayer examines the taxpayer's return and requires the taxpayer to change accounting methods, year and one-half be required to recognize an additional $90,000 of income (one-half in the current year and one-half in the following year) as the adjustment due to the change in accounting methods. b. If the taxpayer voluntarily changes methods, the $90,000 adjustment can be spread over the current and three following years. c. If the taxpayer voluntarily changes methods, the $90,000 reserve can be used to absorb bad debts until the account balance is zero. d. If the IRS examines the taxpayer's return, no adjustment to the reserve account will be required if the balance is consistent with prior bad debt experience