Garner,Inc.determined that it had incorrectly estimated both the estimated life and the estimated residual value of equipment that it purchased two years ago.When Garner accounts for the change in accounting estimates,it must depreciate the remaining book value of the asset over the current and future accounting periods.

Question

Quizplus · Accepted Answer

According to the Generally Accepted Accounting Principles (GAAP), when there is a change in accounting estimate, the company must apply the new estimate to future accounting periods and adjust the remaining book value of the asset in the current and future periods. This means that Garner, Inc. must depreciate the remaining book value of the equipment over the current and future accounting periods after accounting for the change in estimate.