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.
E) it is ignored.

Question

Quizplus · Accepted Answer

When there is a change made to the useful life of an asset, it is considered a change in an accounting estimate. As per the accounting standards, it must be recognized as such and the impact of the reported change should be disclosed in the notes to the accounts. Restating previous financial statements or opening balances is not required in this scenario. Therefore, option A is the correct answer.

When There Is a Change Made to the Useful Life