Mandeep 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)Revisions in useful life are permitted if approved by Canada Revenue Agency.
B)Both the current and future years will be affected by the revision.
C)Retroactive changes must be made to correct previously recorded depreciation.
D)Only future years will be affected by the revision.

Question

Quizplus · Accepted Answer

Revisions in the useful life of an asset affect both the current and future years, as the change is considered a change in accounting estimate and is applied prospectively.