A change in the estimated useful life of a building
A) is not allowed by generally accepted accounting principles.
B) affects the depreciation on the building beginning with the year of the change.
C) must be handled as a retroactive adjustment to all accounts affected,back to the year of the acquisition of the building.
D) creates a new account to be recognized on the income statement reflecting the difference in net income up to the beginning of the year of the change.

Question

Quizplus · Accepted Answer

A change in the estimated useful life of a building affects the depreciation on the building beginning with the year of the change. Generally accepted accounting principles allow for changes in the estimated useful life of an asset if there is evidence of a change in the useful life. However, it does not require a retroactive adjustment to all accounts affected, back to the year of the acquisition of the building, nor does it create a new account to be recognized on the income statement reflecting the difference in net income up to the beginning of the year of the change.

A Change in the Estimated Useful Life of a Building