A change in the residual value of equipment is accounted for:
A)As a prior period adjustment.
B)Prospectively.
C)Retrospectively.
D)None of these answer choices is correct.

Question

Quizplus · Accepted Answer

A change in the residual value of equipment is accounted for prospectively. This means that the change is applied to future financial statements but not to previous ones. It is not a prior period adjustment, which applies to past financial statements, nor is it applied retrospectively to all financial statements.

A Change in the Residual Value of Equipment Is Accounted