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 versus old useful life estimate.
C)A prospective change from the current year through the remainder of its useful life.
D)None of the above is correct.

Question

Quizplus · Accepted Answer

A change from the straight-line method to the sum-of-years'-digits method of depreciation is a change in accounting estimate, and therefore is handled prospectively from the current year through the remainder of its useful life. This means that the change is applied to the remaining book value of the asset as of the beginning of the current year, and the new depreciation expense is calculated based on the remaining useful life of the asset. There is no retrospective adjustment back to the acquisition date, nor is there a cumulative adjustment to income in the current year for the difference in depreciation under the old versus new method.

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