Question

Signify TRUE or FALSE as applicable for each of the following items as they pertain to...

Signify TRUE or FALSE as applicable for each of the following items as they pertain to changes in depreciation estimates.

[T/F]

a. Since estimates are inherent in all depreciation calculations, changes in depreciation estimates require no action be taken.

b. Changes in estimates require that depreciation expense for PRIOR periods be recalculated and restated.

c. Changes in estimates require that depreciation expense for CURRENT and FUTURE periods be recalculated and restated.

d. The current book value of an asset should be used to recalculate depreciation expense.

e. The revised TOTAL useful life should be used to recalculate depreciation expense.

Business   Accounting   
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Answer #1

Solution:

a. False, changes in depreciation estimates requires depreciation to revised for future periods on the basis of remaining useful life.

b. False,Changes in estimates require that depreciation expense for prior periods do not be restated.

c. True, Changes in estimates require that depreciation expense for CURRENT and FUTURE periods be recalculated and restated.

d. True, The current book value of an asset should be used to recalculate depreciation expense.

e. False, revised remaining useful life should be used to recalculate depreciation expense.

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