Final answer:
True, changes in estimates for an asset's depreciation are handled prospectively by adjusting the remaining book value, less salvage value, over the new estimated remaining life of the asset.
Step-by-step explanation:
The statement that changes in estimates for asset depreciation are handled prospectively by dividing the asset's book value less any salvage value by the remaining estimated life is true. When there is a change in the estimated useful life or salvage value of an asset, the way to account for that change is to spread the remaining book value of the asset, after adjusting for salvage value, over the new remaining life of the asset. This does not retroactively change previous depreciation expenses; instead, it adjusts future depreciation expenses.
False. Changes in estimates are handled prospectively by dividing the difference between the asset's book value and any salvage value by the remaining estimated life. This is known as depreciation expense. It is important to adjust the book value of an asset to reflect changes in its estimated useful life or salvage value.