Explanation:
Changes in accounting estimates, such as adjustments to the residual value of a long-lived asset, are handled prospectively. This means the adjustment affects the financial statements for the period of the change and future periods, without altering prior statements. Unlike changes in accounting policies, these adjustments are not shown separately on the income statement.
How should adjustments related to changes in the estimated residual value of a long-lived asset be treated?
A
Applied prospectively.
B
Disclosed separately on the income statement.
C
Applied retrospectively unless impractical.
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