A change from straight-line depreciation to double-declining-balance depreciation would be reported as a. a prospective change in estimate. b. a restatement of the prior period statements only. c. a line item adjustment immediately following income from operations. d. None of these choices are correct.

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18 January, 21:13

A change from straight-line depreciation to double-declining-balance depreciation would be reported as a. a prospective change in estimate. b. a restatement of the prior period statements only. c. a line item adjustment immediately following income from operations. d. None of these choices are correct.

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Carla Davila · Answer 1

a. a prospective change in estimate

Explanation:

Depreciation refers to fall in the value of an asset due to normal wear and tear or efflux of time.

Accounting estimates relate to application of methods, policies or rules applied wherein no other exact method for measurement can be applied. Estimation involves approximation.

Methods of depreciation represent estimates since depreciation is not tangible and it's exact value cannot be verified. It can only be approximated or estimated on rational basis.

A change in method of depreciation would be termed as a change in an estimate.