Which of the following accounting changes requires an emphasis-of-matter paragraph regarding consistency in the auditors' report?
A) A change in the estimated useful lives of a class of fixed assets.
B) A write-off of a patent because future benefits do not appear to exist.
C) A change from the straight-line method of depreciation to an accelerated method for a class of fixed assets.
D) A change in calculating bad debt expense from one percent to two percent of credit sales.

Question

Quizplus · Accepted Answer

A change in the method of depreciation used for a class of fixed assets is considered a change in accounting principle, and therefore requires an emphasis-of-matter paragraph in the auditors' report to address consistency. Options A, B, and D are all changes in accounting estimates, which do not require an emphasis-of-matter paragraph.

Which of the Following Accounting Changes Requires an Emphasis-Of-Matter Paragraph