Question

Which of the following is NOT a change in accounting principle?

a) a change from the LIFO to the average cost inventory costing method

b) a change in the useful life of a depreciable asset

c) a change to implement a new FSB accounting standard

d) a change from the equity method ton the cost method to value investments in subsidiaries

Answer 1

The correct answer is a change in the useful life of a depreciable asset, which is considered a change in accounting estimate rather than a change in accounting principle.

Step-by-step explanation:

The subject of this question is the identification of a change that is not considered a change in accounting principle. Among the options provided, the correct answer is:

• b) a change in the useful life of a depreciable asset

This particular change is considered a change in accounting estimate, not a change in principle. Changes in accounting principles involve a switch from one generally accepted accounting principle to another, such as changing inventory valuation methods or accounting for investments differently. In contrast, a change in the estimated useful life of an asset is an adjustment based on new information or circumstances, affecting the calculation of depreciation.