Final answer:
When estimated depreciation changes, the appropriate action is to revise the current and future years' depreciation. Past financial statements are not retrospectively adjusted, but the depreciation expense going forward is updated to reflect the new estimates.
So option (B) is correct.
Step-by-step explanation:
When there is a change in estimated depreciation, the correct approach is option (b): current and future years' depreciation should be revised. Depreciation estimates need to be updated due to changes in expectations about an asset's useful life or residual value. When such a change occurs, the revised amount of depreciation is accounted for prospectively. This means that past financial statements are not retrospectively adjusted. Instead, the new estimation affects the depreciation expense for the current period in which the change is made and all subsequent periods for the remaining useful life of the asset.
Accounting principles require that when there is a change in the estimate of depreciation, it should be accounted for in the current and future financial statements to reflect the most accurate depiction of the asset's economic usefulness. This adjustment is considered a change in the accounting estimate.
The adjustment is typically made prospectively, meaning it affects the current and future periods but does not require the retroactive correction of previous depreciation. This is because accounting rules generally do not permit the restatement of prior financial statements due to changes in accounting estimates.
In summary, the most accurate representation of the accounting treatment for a change in estimated depreciation is to revise the depreciation for the current and future years, and option (b) reflects this principle.