A change from the straight-line method to the sum-of-years'-digits method of depreciation is handled as:
A)A retrospective change back to the date of acquisition as though the current estimated life had been used all along.
B)A cumulative adjustment to income in the current year for the difference in depreciation under the new vs.old useful life estimate.
C)A prospective change from the current year through the remainder of its useful life.
D)None of these is correct.

Question

Quizplus · Accepted Answer

When changing from the straight-line method to the sum-of-years'-digits method of depreciation, the change is handled as a prospective change from the current year through the remainder of its useful life. This means that the change will only affect future periods and the assets' carrying amounts will not be adjusted retrospectively. Therefore, choice A is incorrect.

Similarly, choice B is incorrect as it suggests a cumulative adjustment to income in the current year for the difference in depreciation under the new vs. old useful life estimate, which does not reflect the proper treatment for a change in depreciation method.

Therefore, the correct choice is C, which reflects the appropriate handling of a change in depreciation method.

A Change from the Straight-Line Method to the Sum-Of-Years'-Digits Method