In 2016, due to a change in marketing forecasts, Barney Corporation reduced the projected life of its patent for producing round dice. The cumulative patent amortization prior to 2016 would have been $10 million higher had the new life been used. Barney's tax rate is 30%. Barney's retained earnings as of December 31, 2016, would be:

a. Overstated by $3 million.

b. Overstated by $10 million.

c. Unaffected.

d. Overstated by $7 million.

Question

21 August, 01:43

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Layne Roy · Answer 1

(C) Unaffected.

Explanation:

This is a change in estimate. No prior period adjustment is needed.