A Revision of an Estimate Which Extends the Asset's Useful

question 43

Multiple Choice

A revision of an estimate which extends the asset's useful life:

• A) is ignored until the last year of the asset's life
• B) requires restatement of prior years' financial statements
• C) increases depreciation expense and decreases owners' equity
• D) decreases depreciation expense and increases owners' equity

---

Definitions:

Rates of Return

The net gain or loss on an investment over a specified time period, expressed as a percentage of the investment's initial cost.

EAR

Effective Annual Rate, a measure of interest that takes into account the compounding of interest over time.

Borrower

An individual, company, or entity that receives funds from another party with the agreement to repay the principal amount along with any agreed-upon interest.

Annualized (Geometric)

Annualized (geometric) refers to the method of calculating an average rate of return that accounts for the compounding effect over a period.