B is corrent. Per ASC 250-10-45-17, changes in accounting estimates are reflected prospectively (i.e., no retroactive adjustment). As computed below, the depreciation base beginning in year 4 is $1,500,000. The depreciation taken in year 1-year 3 was $1,500,000 ($3,000,000/6 years × 3 years). The remaining depreciation base of $1,500,000 ($3,000,000 – $1,500,000) is divided by 5 years (8 years – 3 years since acquisition), resulting in $300,000 per year depreciation.
A is incorrect. Per ASC 250-10-45-17, changes in accounting estimates are reflected prospectively (i.e., no retroactive adjustment). As computed below, the depreciation base beginning in year 4 is $1,500,000. The depreciation taken in year 1-year 3 was $1,500,000 ($3,000,000/6 years × 3 years). The remaining depreciation base of $1,500,000 ($3,000,000 – $1,500,000) is divided by 5 years (8 years – 3 years since acquisition), resulting in $300,000 per year depreciation.
C is incorrect. Per ASC 250-10-45-17, changes in accounting estimates are reflected prospectively (i.e., no retroactive adjustment). As computed below, the depreciation base beginning in year 3 is $1,500,000. The depreciation taken in year 1-year 3 was $1,500,000 ($3,000,000/6 years × 3 years). The remaining depreciation base of $1,500,000 ($3,000,000 – $1,500,000) is divided by 5 years (8 years – 3 years since acquisition), resulting in $300,000 per year depreciation.
A is incorrect. Per ASC 250-10-45-17, changes in accounting estimates are reflected prospectively (i.e., no retroactive adjustment). As computed below, the depreciation base beginning in year 4 is $1,500,000. The depreciation taken in year 1-year 3 was $1,500,000 ($3,000,000/6 years × 3 years). The remaining depreciation base of $1,500,000 ($3,000,000 – $1,500,000) is divided by 5 years (8 years – 3 years since acquisition), resulting in $300,000 per year depreciation.
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