AASB 101 requires that accounting policy changes be disclosed in a note to the financial statements.A business bought new equipment and thought it would have a six-year useful life.After two years,the business decided that the equipment would be useful for only three more years.This would be considered a:
A)change in accounting estimate.
B)change in accounting policy.
C)recording error.
D)contingency.

Question

Quizplus · Accepted Answer

The change in useful life of the equipment from six years to three years is a change in accounting estimate, which should be disclosed in a note to the financial statements as required by AASB 101. It does not constitute a change in accounting policy, recording error, or a contingency.

AASB 101 Requires That Accounting Policy Changes Be Disclosed in a Note