During 2012, Kramer Company Determined, Based on New Information, That

Multiple Choice

During 2012, Kramer Company determined, based on new information, that equipment previously depreciated using a ten-year life and a salvage value of $100, 000 had a total estimated life of only six years and a salvage value of $50, 000.The equipment was acquired on January 1, 2010, and was depreciated using the straight-line method.Kramer made an accounting change in 2012 to reflect this additional information, and the change was approved by the IRS.Kramer has an income tax rate of 30%.Assuming Kramer's income before depreciation, before income taxes, and before any retroactive effect of the accounting change (if any) for the year ended December 31, 2012, was $180, 000, Kramer's net income for 2012 should be

A) $80, 000
B) $67, 500
C) $56, 000
D) $47, 250