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Account for Changing Depreciation Estimates - Explained

How to Account for Changes in Depreciation Estimates?

Written by Jason Gordon

Updated at April 7th, 2022

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Table of Contents

Changes in Depreciation EstimatesExample of How to Handle Changes in Depreciation Estimates

Changes in Depreciation Estimates

Depreciation is dependent on three things: 

  • tax,
  • salvage value, and 
  • useful life.

If we have a change in salvage value or useful life, we use the new estimates to compute the new depreciation. 


Back to: Accounting & Taxation

We have to do a recalculation or a new calculation for the current and the future periods by revising the depreciation expense computations.

The objectives is to spread the cost yet to be depreciated over the remaining useful life. When we're doing the computation, we're only affecting this year and forward. 

Example of How to Handle Changes in Depreciation Estimates


Related Topics

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    • Property, Plant, and Equipment
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  • How Reporting Depreciation for Tax is Unique? – Financial Accounting
  • What happens when Depreciation Estimates Change? – Financial Accounting
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depreciation estimates change depreciation

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