Question

Which of the following disclosures is required for a change from sum-of-the-years-digits to straight-line?

a. the cumulative effect on prior years, net of tax, in the current retained earnings statement
b. restatement of prior years' income statements
c. re-computation of current and future years' depreciation
d. all of these required

Answer 1

The re-computation of current and future years' depreciation is required for a change from sum-of-the-years-digits to straight-line. Correct option is c.

Step-by-step explanation:

The disclosure required for a change from sum-of-the-years-digits to straight-line is the re-computation of current and future years' depreciation.

When changing the depreciation method from sum-of-the-years-digits to straight-line, it is necessary to recalculate the depreciation expense for the current and future years using the new method. This is because the sum-of-the-years-digits method front-loads the depreciation expense, while the straight-line method spreads it evenly over the useful life of the asset.

Therefore, option c is the correct answer, as it states that the re-computation of current and future years' depreciation is required.