Question

In 2021, 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 2021 would have been $18 million higher had the new life been used. Barney's tax rate is 25%. Barney's retained earnings as of December 31, 2021, would be:

Answer 1

Answer: unaffected

Step-by-step explanation:

We should note that a retrospective adjustment isn't necessarily needed when there's an alternation to a accounting estimate.

With regards to this Barney's retained earnings as of December 31, 2021, would neither be understated or overstated but would be unaffected.