MCQ

1)

On January 1, 2015, Rabbit Corp. acquired machinery that it depreciated using the straight-line method with an estimated useful life of 15 years and no residual value. On January 1, 2020, Rabbit estimated that the remaining life of this machinery was six years with no residual value. This change should be accounted for

a) as a prior period adjustment.

b) as the cumulative effect of a change in accounting principle in 2020.

c) by setting future annual depreciation equal to one-sixth of the book value on January 1, 2020.

d) by continuing to depreciate the machinery over the original 15-year life.