A change in estimate of an asset's residual value involves restating the income statements of past periods for the estimate change.

Question

Quizplus · Accepted Answer

A change in estimate, such as a change in an asset's residual value, is accounted for prospectively, meaning it affects the depreciation calculation from the point of the change forward and does not require restating past financial statements.

A Change in Estimate of an Asset's Residual Value Involves