Ranger Company Has Decided to Change the Estimate of the Useful

question 96

Multiple Choice

Ranger 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?

• A) Revisions in useful life are permitted if approved by the Chartered Professional Accountants.
• B) Retroactive changes must be made to correct previously recorded depreciation.
• C) Depreciation in future years only will be affected by the revision.
• D) Depreciation in both current and future years will be affected by the revision.

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Definitions:

Prevention Costs

Expenses incurred to avoid or minimize the number of defects in products before they reach the customer.

Appraisal Costs

Costs associated with measuring and monitoring activities to ensure quality or compliance with standards, typically including testing and inspections.

Non-Value-Added Activities

Operations or tasks that consume resources or time but do not add any value to the product or service from the customer's perspective.

Cell Conversion Cost

The cost associated with transforming materials into finished products within a specified production cell or unit.