A change in the estimated useful life of equipment requires
A)a retroactive change in the amount of depreciation recognized in previous years.
B)that no change be made to depreciation calculations, so that depreciation expense amounts are comparable over the life of the asset.
C)that the amount of depreciation expense be changed in the current and future years.
D)that profit for the current year be increased.

Question

Quizplus · Accepted Answer

A change in the estimated useful life of equipment would require a change in the amount of depreciation expense recognized in the current and future years in order to reflect the revised useful life. This is necessary to ensure that the depreciation expense reflects the allocation of the asset's cost over its revised useful life, and is consistent with the matching principle of accounting. Option A is incorrect because a retroactive change in the amount of depreciation recognized in previous years would not reflect the revised estimated useful life of the equipment. Option B is incorrect because it suggests that no change be made to the depreciation calculations, which would result in an inconsistent depreciation expense over the life of the asset. Option D is incorrect because a change in the estimated useful life of equipment would not necessarily lead to an increase in profit for the current year.

A Change in the Estimated Useful Life of Equipment Requires