PRC-1 · Chapter 6 · Question 23 of 100
Which of the following describes the correct accounting treatment if management decides to change an asset's depreciation method from straight-line to reducing balance?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) Account for the change prospectively, applying the new method to the carrying amount from the current period forward.
Explanation
A change in depreciation method is a change in accounting estimate. Changes in estimates are accounted for prospectively, meaning the new method is applied to the current carrying amount moving forward.
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