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agarcia255
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Posted: 15 Apr 2009 at 15:33 \| IP Logged

Case: Quo changed its method of depreciating office equipment from an accelerated method to the straight-line method to a more closely reflect costs in later years.

Wiley's Ans: Change in Acctg Principle/Prospective Approach.

Comments: I agree with the prospective approach. But this s/b change in Accounting Estimate.

Question: Anyone who agrees with Wiley? Please explain. Thanks

divyagovil1
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Posted: 15 Apr 2009 at 15:41 \| IP Logged

Change in accounting estimate is always dealt prospectively, that is, current and future years.

so, the answer is correct..... Prospective approach, in other words, change in accounting estimate.

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agarcia255
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Posted: 15 Apr 2009 at 16:20 \| IP Logged

The choices were :

A - change in acctg principle

B - change in acctg estimate

Wiley chose A - change in acctg principle, instead of B - change in estimate.

His answer contradicts SFAS 154.

backforth
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Posted: 15 Apr 2009 at 17:15 \| IP Logged

I concur, Accounting estimate prospective approach

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Mario

MBKcole
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Posted: 15 Apr 2009 at 17:16 \| IP Logged

i think it is fundamentally an accounting change in principle (of depreciation) but treated as a change in estimate for financial reporting.

Therefore the Wiley answer is correct

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