Pugwash Company has decided to change the estimate of the useful life of an asset that has been in service for 2 years. Which of the following statements describes the proper way to revise a useful life estimate?

Question

Quizplus · Accepted Answer

When revising the estimate of the useful life of an asset, depreciation in both current and future years will be affected by the revision. This is because the change in useful life will result in a change in the amount of depreciation expense recorded each year, including the current year. Retroactive changes should not be made as the estimate is being revised prospectively. Additionally, approval from the Chartered Professional Accountants is not specifically required for such revisions.

Pugwash Company Has Decided to Change the Estimate of the Useful