Grant Company has decided to change the estimate of the useful life of an asset that has been in service for 2 years. Which of the following statements describes the proper way to revise a useful life estimate?
A) Revisions in useful life are permitted if approved by the IRS.
B) Retroactive changes must be made to correct previously recorded depreciation.
C) Only future years will be affected by the revision.
D) Both current and future years will be affected by the revision.

Question

Quizplus · Accepted Answer

When a company changes the estimate of an asset's useful life, the change affects both the current and future periods. Past depreciation is not adjusted retroactively.

Grant Company Has Decided to Change the Estimate of the Useful