When an Asset's Estimated Useful Life and Residual Value Turn

question 30

Multiple Choice

When an asset's estimated useful life and residual value turn out to be materially incorrect and the asset has not reached the end of its useful life, the correct procedure to follow is:

• A) re-issue corrected financial statements for all prior years.
• B) re-issue corrected financial statements for only the most recent three years.
• C) ignore the problem since estimates are not expected to be exact anyway.
• D) allocate the remaining depreciable amount over the remaining useful life.

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Definitions:

Practical

Concerned with the actual doing or use of something rather than with theory and ideas.

Psychology

The scientific study of mind and behavior, including thought, emotion, and interactions.

Cognitive Capacities

The mental abilities and processes related to acquiring knowledge, reasoning, problem-solving, and abstract thinking.

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Relating to genes or heredity.