Canetoads Ltd Has Discovered That the Estimated Useful Life Made

question 43

Multiple Choice

Canetoads Ltd has discovered that the estimated useful life made on a material depreciable asset was incorrect due to a change in the way the asset was being used. The correct accounting treatment of this event is to:

• A) disclose the change in the notes to the financial statements.
• B) treat it as an error and adjust retrospectively.
• C) treat it as a change in an accounting estimate and adjust prospectively.
• D) treat it as a change in an accounting estimate and adjust retrospectively.

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Definitions:

Audit

A systematic examination of books, accounts, documents, and vouchers of an organization to ascertain how far the financial statements present a true and fair view of the concern.

Opinion

A belief or judgment formed about something, not necessarily based on fact or knowledge.

Corporate Social Responsibility

A business model that helps a company be socially accountable—to itself, its stakeholders, and the public; it involves practicing good citizenship through sustainable business operations and philanthropy.

Sarbanes-Oxley Act

U.S. legislation enacted in 2002 to protect investors from fraudulent financial reporting by corporations, requiring strict adherence to accounting standards and the establishment of internal controls.