When a company decides to switch from the double-declining balance method to the straight-line method, this change should be handled as a
A) change in accounting principle.
B) change in accounting estimate.
C) prior period adjustment.
D) correction of an error.

Question

Quizplus · Accepted Answer

Switching from the double-declining balance method to the straight-line method is considered a change in accounting estimate. This is because the method of depreciation affects the timing and amount of depreciation expense, which is an estimate of the asset's useful life and salvage value.

When a Company Decides to Switch from the Double-Declining Balance