Obviously, the initial assumption about useful life and residual value is only an estimate. Time and new information may suggest that the initial assumptions need to be revised, especially if the initial estimates prove to be materially off course. It is well accepted that changes in estimates do not require restating the prior period financial statements; after all, an estimate is just that, and the financial statements of prior periods were presumably based on the best information available at the time. Therefore, such revisions are made prospectively (over the future) so that the remaining depreciable base is spread over the remaining life.To illustrate, reconsider the straight-line method. Assume that two years have passed for the $100,000 asset that was initially believed to have a four-year life and $10,000 salvage value. As of the beginning of Year 3, new information suggests that the asset will have a total life of seven years (three more than originally thought), and a $5,000 salvage value. As a result, the revised remaining depreciable base (as of the beginning of Year 3) will be spread over the remaining five years, as follow
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