When There Is a Change Made to the Useful Life

question 34

Multiple Choice

When there is a change made to the useful life of an asset:

• A) It must be recognised as a change in an accounting estimate and the impact of the reported change must be disclosed in the notes to the accounts.
• B) It must be recognised as an error and all previous financial statements must be restated.
• C) It must be recognised as an error and opening retained earnings and opening balances of the asset must be restated.
• D) It is recognised as a change in an accounting estimate and the opening retained earnings and opening balances of the asset must be restated.

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Definitions:

Mediation

A method of settling disputes outside of court by using the services of a neutral third party, who acts as a communicating agent between the parties and assists them in negotiating a settlement. A method of dispute settlement that is less formal than arbitration.

ADR

Acronym for Alternative Dispute Resolution, which refers to methods like mediation and arbitration used to settle disputes without traditional litigation.

Negotiation

A process in which parties attempt to settle their dispute voluntarily, with or without attorneys to represent them.

Settlement Agreement

An out-of-court resolution to a legal dispute, agreed to by the parties in writing. A settlement agreement may be reached at any time prior to or during a trial.