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Changes in Estimates

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  1. Changes in Estimates • Revision of estimated useful life • Reflect in current F/S • Disclose in footnotes Intermediate Accounting I – Fall 2011

  2. Change in Depr. Method • Separately reported item: treat prospectively • Pro forma prior years’ impact if material • Disclose in footnotes Intermediate Accounting I – Fall 2011

  3. Error Correction-Material • Restatement • Adjust R/E & Stmt. of S/E • Disclose in footnotes Intermediate Accounting I – Fall 2011

  4. Goodwill (SFAS 142) &Impairment • G/W must be tested annually for impairment • Impairment-operational assets & G/W • Triggering event • Recognition requirement • Measurement Intermediate Accounting I – Fall 2011

  5. Maintenance or Betterment • Addition or betterment, if • Increases output • Improves quality • Extends useful life • Reduces operating cost • Expense if maintenance • Capitalize if betterment Intermediate Accounting I – Fall 2011

  6. Additions, Improvements &Rearrangements • Additions: capitalize • Improvements • Substitution • Capitalization • Reduction of accumulated depreciation • Rearrangements: capitalize if material • Dispositions: results in gain or loss Intermediate Accounting I – Fall 2011