Creighton, Inc

question 43

Multiple Choice

Creighton, Inc.determined that it had incorrectly estimated both the useful life and the estimated residual value of equipment which it purchased 2 years ago.When accounting for the change in its accounting estimates, Creighton must

• A) correct the financial statements of prior years affected by the errors in the estimates.
• B) determine the book value at the point of change and depreciate that amount over the remaining useful life.
• C) add the amount of the error to the amount of the current year's depreciation expense.
• D) determine the effect of the error and report it as a loss on the income statement in Other Revenues and Expenses.

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