Accounting for a Change in the Estimated Service Life of Equipment

question 46

Multiple Choice

Accounting for a change in the estimated service life of equipment:

• A) Is handled prospectively.
• B) Requires retroactive restatement of prior year's financial statements.
• C) Requires a prior period adjustment.
• D) Is handled currently as a change in accounting principle.

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Definitions:

Internal Control

Internal control comprises the policies and procedures implemented by a company to safeguard its assets, ensure financial reporting accuracy, and comply with laws and regulations.

Principle Of Internal Control

A framework designed to provide reasonable assurance regarding the achievement of objectives in effectiveness and efficiency of operations, reliability of financial reporting, and compliance with applicable laws and regulations.

Fraud

Fraud is a deliberate act of deception intended for personal gain or to cause a loss to another party, often involving financial transactions.

Cash Equivalents

Investments of a short-term nature that are both easily converted into precise cash amounts and carry a minimal risk of fluctuating in value.