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Sandhill Anti - Pollution Company is suffering declining sales of its principal product, non - biodegradable plastic cartons. The president, Anthony Walker, instructs his controller,
Sandhill AntiPollution Company is suffering declining sales of its principal product, nonbiodegradable plastic cartons. The president,
Anthony Walker, instructs his controller, Michelle Hall, to lengthen asset lives to reduce depreciation expense. A processing line of
automated plastic extruding equipment, purchased for $ million in January was originally estimated to have a useful life of
years and a salvage value of $ Depreciation has been recorded for years on that basis. Anthony wants the estimated life
changed to years total and the straightline method continued. Michelle is hesitant to make the change, believing it is unethical to
increase net income in this manner. Anthony says, "Hey, the life is only an estimate, and l've heard that our competition uses a year
life on their production equipment."
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What is the effect of Anthony's proposed change on income before taxes in the year of change?
Income before income taxes in the year of change is
by
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