Changes in the estimates for residual value or useful life result in changes in the amortization expense calculation.These changes are handled:
A)retroactively.
B)as cumulative changes.
C)prospectively.
D)as prior period adjustments.

Question

Quizplus · Accepted Answer

Changes in estimates for residual value or useful life should be handled prospectively, meaning that the revised estimate is used to calculate the remaining amortization expense. Retroactive adjustments or cumulative changes are not appropriate, as they would require restating prior periods and could potentially misrepresent financial statements. Prior period adjustments are only necessary for errors or omissions in past financial statements, not for changes in estimates.

Changes in the Estimates for Residual Value or Useful Life