Maxim,Inc.changed its depreciation method from units-of-production to straight-line.Maxim is:
A)only allowed to make this change if it gets permission from the IRS.
B)only allowed to make this change if it can show the change results in a lower net income.
C)not allowed to change depreciation methods.
D)only allowed to make this change if it can show the change results in a better measure of the business's income.

Question

Quizplus · Accepted Answer

Companies may change depreciation methods although such a change requires more disclosure.Under GAAP,changes in accounting estimates and depreciation methods should be made only when a new estimate or accounting method "better measures" the periodic income of the business.

Maxim,IncChanged Its Depreciation Method from Units-Of-Production to Straight-Line