A change in the estimated useful life of equipment requires
A) a retroactive change in the amount of periodic depreciation recognized in previous years.
B) that no change be made in the periodic depreciation so that depreciation amounts are comparable over the life of the asset.
C) that the amount of periodic depreciation be changed in the current year and in future years.
D) that income for the current year be increased.

Question

Quizplus · Accepted Answer

A change in estimated useful life of equipment would require a change in the amount of periodic depreciation recognized in current and future years, which means option C is correct. Option A is incorrect because it refers to a retrospective change and it would not be correct because it would change the comparability of financial statements between years. Option B is incorrect because it does not reflect the change in the useful life of the equipment, and lastly, option D is incorrect because it is not necessary to increase income due to the change in estimated useful life.

A Change in the Estimated Useful Life of Equipment Requires