FAR 16 - Accounting Changes

Question 1

Do you use the retrospective approach for accounting changes for:

Depreciation method, useful life, or salvage value
allowance for credit losses
Warranty cost estimates

Answer 1

No, these are changes in accounting estimates.
change applied to the current period

restate for

Inventory costing method
long-term contract revenue recognition
Adoption of a new accounting standard

Question 2

Is salvage value ignored when you use Double Declining Balance Depreciation?

Answer 2

Yes!

Question 3

What account is debited when you do a prior period adjustment for a net income error?

Answer 3

Retained earnings