Fraser Ltd. has decided to change the estimate of the useful life of an asset that has been in service for two years. Which of the following statements describes the proper way to revise a useful life estimate?
A) Both the current and future years will be affected by the revision.
B) Retroactive changes must be made to correct previously recorded depreciation.
C) Only future years will be affected by the revision.
D) Revisions in useful life are permitted if approved by Canada Revenue Agency.

Question

Quizplus · Accepted Answer

The revision of an estimate, such as the useful life of an asset, affects both the current and future periods. Past depreciation is not adjusted retroactively.