We will discus the accounting for a change in a financial accounting estimate related to depreciation. The calculation of depreciation is an estimate of the cost allocated to the useful life. There are a few components of the calculation that are estimates that can change as we get better information over time. One component of the depreciation calculation that is an estimate is the useful life, how long the depreciable asset will be used in operations. Another estimate in the depreciation calculation is the salvage value. When these estimates change over time it is often best to account for the change at the point it is found and going forward rather then going back and recalculating depreciation for prior years.
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