When there is a change made to the useful life of an asset:
A) It must be recognised as a change in an accounting estimate and the impact of the reported change must be disclosed in the notes to the accounts.
B) It must be recognised as an error and all previous financial statements must be restated.
C) It must be recognised as an error and opening retained earnings and opening balances of the asset must be restated.
D) It is recognised as a change in an accounting estimate and the opening retained earnings and opening balances of the asset must be restated.

Question

Quizplus · Accepted Answer

A change in the useful life of an asset is considered a change in an accounting estimate, which requires disclosure in the notes to the financial statements. It does not require restatement of previous financial statements or opening retained earnings and opening balances of the asset.

When There Is a Change Made to the Useful Life