Which of the following events would be accounted for as a prior-period adjustment?
A)change in the depreciable lives of plant assets
B)an overstatement of depreciation expense in a prior year
C)change in the method of computing depreciation of plant assets
D)change in inventory cost flow assumption from first-in, first-out to last-in, first-out

Question

Quizplus · Accepted Answer

A prior-period adjustment is made when an error is discovered from a prior year's financial statement that needs to be corrected. An overstatement of depreciation expense in a prior year is an error that needs to be corrected and, therefore, would be accounted for as a prior-period adjustment. The other options listed are accounting changes that would be accounted for prospectively.

Which of the Following Events Would Be Accounted for as a Prior-Period