A change in the estimated useful life and residual value of machinery in the current year is handled as:
A)A retrospective change back to the date of acquisition as though the current estimated life and residual value had been used all along.
B)A prospective change from the current year through the remainder of its useful life, using the new estimates.
C)A cumulative adjustment to income in the current year for the difference in depreciation under the new vs.old estimates.
D)None of these is correct.

Question

Quizplus · Accepted Answer

A change in the estimated useful life and residual value of machinery in the current year is handled as a prospective change from the current year through the remainder of its useful life, using the new estimates. This means that the changes are only applied going forward and not retroactively, which rules out option A. Option C is also incorrect, as no cumulative adjustment is made in the current year. Therefore, option B is the correct choice.

A Change in the Estimated Useful Life and Residual Value