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.

---

Definitions:

Innovator's Imperative

The necessity for creators and businesses to constantly innovate and adapt in order to stay competitive and relevant in their markets.

Local Market Problems

Issues and challenges specific to a particular geographic area or market that can affect the operation and success of businesses.

Unique Solutions

Customized or novel approaches specifically designed to solve a particular problem or meet unique requirements.

Patent

A legal document granted by the government giving an inventor exclusive rights to make, use, sell, and import an invention for a certain period of time.