AASB 101 requires that accounting policy changes be disclosed in a note to the financial statements. A business bought new equipment and thought it would have a six- year useful life. After two years, the business decided that the equipment would be useful for only three more years. This would be considered a:
A)contingency.
B)change in accounting policy.
C)change in accounting estimate.
D)recording error.

Question

Quizplus · Accepted Answer

A change in the useful life of equipment is considered a change in accounting estimate, not a change in accounting policy.

AASB 101 Requires That Accounting Policy Changes Be Disclosed in a Note