A Change in the Salvage Value of an Asset Depreciated

question 64

Multiple Choice

A change in the salvage value of an asset depreciated on a straight-line basis and arising because additional information has been obtained is:

• A) an accounting change that should be reported in the period of change and future periods if the change affects both.
• B) an accounting change that should be reported by restating the financial statements of all prior periods presented.
• C) a correction of an error.
• D) not an accounting change.

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Definitions:

Operating Expenses

Costs associated with a business’s operations, including rent, utilities, payroll, and materials, but excluding the cost of goods sold.

Discounted Price

The reduced price of a good or service, typically offered for promotions or sales.

Retail Selling Price

The final price at which goods are sold to consumers, including all taxes, markups, and additional costs.

Mark-up

The amount added to the cost price of goods to cover overhead and profit, determining the selling price.