A Change in Depreciation Method Is Considered a Change in Accounting

question 5

Essay

A change in depreciation method is considered a change in accounting estimate resulting from a change in accounting principle. In other words, a change in the depreciation method is similar to changing the economic useful life of a depreciable asset, and therefore the two events should be reported the same way. Accordingly, Green reports the change prospectively; previous financial statements are not revised. Instead, the company simply employs the straight-line method from then on. The undepreciated cost remaining at the time of the change would be depreciated straight-line over the remaining useful life.

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Definitions:

Telecommunication Linkages

Connections established through electronic systems or networks that facilitate the transfer of data and information over distances.

Remote Location

A place situated far from the main centers of population or operation, often requiring digital connectivity for communication.

Performance Appraisal

The systematic evaluation of an employee's performance in their job role, often used for developmental or reward decisions.

Measurement Error

refers to the difference between the actual value and the measured value caused by imprecision or inaccuracies in data collection or analysis.