Economics · Accounting Standards
A manufacturing concern decides to change its depreciation method for plant and machinery from the Straight Line Method to the Written Down Value method to better reflect the pattern of consumption of future economic benefits. According to AS 5, how should this change be treated?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1As a violation of the Consistency Concept, which is strictly prohibited under Indian GAAP.
- 2As a prior period error that must be corrected by adjusting the opening balance of retained earnings.
- 3As a change in accounting estimate requiring prospective application in the current and future periods.✓
- 4As a change in accounting policy requiring retrospective restatement of previous years' figures.
Correct answer
As a change in accounting estimate requiring prospective application in the current and future periods.
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