The financial statement presentation of a change in depreciation method is most similar to that of reporting:
A)Changes in accounting estimates.
B)Prior period adjustments.
C)Correction of errors.
D)Extraordinary items.

Question

Quizplus · Accepted Answer

A change in depreciation method is considered a change in accounting estimate since it involves a change in the useful life or salvage value of a long-term asset. The financial statement presentation of such a change is similar to the disclosure of changes in estimates, which requires prospective application and disclosure of the reasons for the change.

The Financial Statement Presentation of a Change in Depreciation Method