On january 2 2000 the companys records included prepaid

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On January 2, 2000, Getaway Company began expensing certain costs as they are incurred. In the past, the company had treated these costs as a prepaid asset which was then allocated to expense over several years. On January 2, 2000, the company's records included prepaid expense in the amount of $150,000. The appropriate tax rate is 30%. The cumulative effect on 2000 earnings resulting from this change is:

1) $ 0.

2) $45,000.

3) $150,000.

4) $105,000.

Reference no: EM13482122

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