Revising an estimate of the useful life or salvage value of a plant asset is referred to as a change in accounting estimate and is reflected in the current, and future financial statements.

Question

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Revising an estimate of the useful life or salvage value of a plant asset is indeed considered a change in accounting estimate and it will be reflected in the current, and future financial statements. A change in accounting estimate is a prevailing adjustment made to the estimated values of assets, liabilities, revenues or expenses, based on new information, insights or experiences. It is accounted for prospectively, meaning that it affects the current and future periods but not prior periods. The revised estimate should be based on the best judgment, evidence, and assumptions available at the time and should be disclosed in the footnotes to the financial statements to inform the users of the change and its impact.

Revising an Estimate of the Useful Life or Salvage Value