When a change in depreciation method occurs
A) prior years' financial statements should be changed to reflect the newly adopted method.
B) the change should be reported in current and future years.
C) the cumulative effect of the change should be reflected on the income statement as of the beginning of the next year.
D) the cumulative effect of the change in accounting principle should be classified as an discontinued operations on the income statement.

Question

Quizplus · Accepted Answer

When a change in depreciation method occurs, it is treated as a change in accounting estimate. Therefore, the change should be applied prospectively, affecting the current and future periods only, without altering prior financial statements.

When a Change in Depreciation Method Occurs