46 ) On January 1 , 2005 , Lynn Corporation acquired equipment at a cost of $ 600,000 . Lynn adopted the double-declining balance method of depreciation for this equipment and had been recording depreciation over an estimated life of eight years , with no residual value . At the beginning of 2008 , a decision was made to change to the straight-line method of depreciation for this equipment . Assuming a 30 % tax rate , the cumulative effect of this accounting change on beginning retained earnings , net of tax , is
A . $ 78,750 . B . $ 121,875 . C . $ 0 . D . $ 77,109 .
47 ) On January 1 , 2005 , Baden Co ., purchased a machine ( its only depreciable asset ) for $ 300,000 . The machine has a five-year life , and no salvage value . Sum-of-the-years ‟ -digits depreciation has been used for financial statement reporting and the elective straight-line method for income tax reporting . Effective January 1 , 2008 , for financial statement reporting , Baden decided to change to the straight-line method for depreciation of the machine . Assume that Baden can justify the change . Baden ‟ s income before depreciation , before income taxes , and before the cumulative effect of the accounting change ( if any ), for the year ended December 31 , 2008 , is $ 250,000 . The income tax rate for 2008 , as well as for the years 2005-2007 , is 30 %. What amount should Baden report as net income for the year ended December 31 , 2008 ?
A . $ 154,000 B . $ 60,000 C . $ 91,000 D . $ 175,000