A change in the amortization rate for an intangible asset should be accounted for:

Question

Quizplus · Accepted Answer

A change in the amortization rate for an intangible asset should be accounted for on a prospective basis, which means that the change will affect future periods only and will not require a restatement of prior periods. This is consistent with the principle of conservatism in accounting, which requires that the financial statements be adjusted only for actual events and not for estimates or projections. Therefore, option A (retroactive basis) and option B (prior period adjustment) are not appropriate choices. Option D (current basis) is also not an appropriate choice because it implies that the change is being accounted for in the current period only, which is inconsistent with the prospective basis requirement.

A Change in the Amortization Rate for an Intangible Asset