A Change from an Accelerated Depreciation Method to the Straight-Line

question 52

Multiple Choice

A change from an accelerated depreciation method to the straight-line depreciation method should be accounted for as a

• A) change in accounting estimate.
• B) change in accounting estimate effected by a change in accounting principle.
• C) correction of an error.
• D) a prior period adjustment.

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Definitions:

Incremental Cash Flows

The additional cash flow a business receives from taking on a new project or investment.

Replacement Decision

The evaluation process for determining whether to repair, maintain or replace an asset or piece of equipment.

Volume Of Operations

The scale or magnitude of the business activities that a company carries out in a specific period.

Sunk Costs

Costs that have already been incurred and cannot be recovered, and thus should not be considered in new decision making.