Question

One of the following is an example of managing earnings down (reducing earnings)?

(A) Reducing research and development expenditures.
(B) Changing estimated bad debts from 3 percent to 2.5 percent of sales.
(C) Revising the estimated life of equipment from 10 years to 8 years.
(D) Not writing off obsolete inventory.

Answer 1

Answer:

The answer is (C) Revising the estimated life of equipment from 10 years to 8 years.

Explanation:

Revising estimated life of equipment from 10 years to 8 years has the effect of increasing annual charge of depreciation.