Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281



Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem

A change in the expected service life of an asset arising because additional information has been obtained is:

  1. a. an accounting change that should be reported by restating the financial statements of all prior periods represented
  2. b. an accounting change that should be reported in the period of change and future periods if the change affects both
  3. c. a correction of an error
  4. d. not an accounting change

To determine

Find the correct option, the option which explains the correct type of accounting change.


Accounting changes: When a company requires to sacrifice the consistent accounting methods and procedures, to enhance the usefulness and relevance of the accounting information, those changes are referred to as accounting changes. Such inevitable accounting changes decrease the comparability and consistency of accounting information. The reasons for accounting changes could be new methods introduced by FASB (Financial Accounting Standards Board), changes in accounting principles, and changes in accounting estimates. The following are the three types of accounting changes:

  • Change in an accounting principle
  • Change in an accounting estimate
  • Change in a reporting entity

Justification for correct answer: When a company changes or revises an estimate due to additional or new experience, such a change is referred to as change in accounting estimate...

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