Question

Which of the following changes in estimates may cause net income to differ? (Check all that apply.)

a) Estimated residual values
b) Estimated useful lives

Answer 1

Changes in estimated residual values and estimated useful lives can cause net income to differ.

Step-by-step explanation:

In accounting, estimates are used to determine the value of certain items, such as the residual value and useful life of assets. Changes in these estimates can affect the calculation of depreciation expense, which in turn affects net income. Here's how each change can impact net income: