When Estimates of Useful Life and Residual Value Made for the Purposes

question 50

Multiple Choice

When estimates of useful life and residual value made for the purposes of calculating depreciation, in later years turn out to be materially incorrect and the asset has not reached the end of its useful life, the procedure to be followed is to:

• A) issue corrected financial statements for all prior years.
• B) 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) spread the remaining depreciable amount over the remaining useful life.

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