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CS Executive · Corporate Accounting and Financial Management · Introduction to Accounting

Under the accounting standards framework, a change from the written down value method to the straight line method of depreciation is treated as:

A change from the written down value method to the straight line method is a change in accounting policy. It is made only when required by law or a standard, or for more appropriate presentation, and its effect must be disclosed in the financial statements.

  1. AA change in accounting policy, applied with the required disclosuresCorrect
  2. BA change in accounting estimate only, with no disclosure
  3. CA prior period item to be ignored
  4. DAn extraordinary gain recognised directly in reserves

Explanation

Changing the depreciation method is a change in accounting policy, as the basis of measurement is altered. Its effect must be quantified and disclosed, and it is adopted only if required by law, a standard, or when it gives a more appropriate presentation. It is not merely an estimate change without disclosure.

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