Changes in accounting estimates are adjustments made to the estimated results. They arise from new information or additional experience and can affect financial statements. Some examples include revis

ing the useful life of an asset, reassessing the collectability of accounts receivable, or updating the expected costs of a long-term project.

Changes in accounting estimates are recognized in the period in which the estimate is revised and in any future periods affected by the change. They are not considered errors or corrections of prior period errors, but rather adjustments to reflect the most current and accurate information available.

It is important for companies to disclose changes in accounting estimates in their financial statements and provide explanations for the reasons behind the changes. This transparency helps stakeholders understand the impact of the changes on the company's financial performance and make informed decisions.

Overall, changes in accounting estimates are a normal and necessary part of financial reporting, as they reflect the evolving nature of business operations and economic conditions. Companies should regularly review and update their estimates to ensure that their financial statements accurately reflect the most current information available.

Changes in accounting estimates are adjustments made to the estimated results of past events. They arise when new information or additional experience indicates that the original estimate was incorrect. Some examples include:

- Changes in the estimated useful life of an asset
- Changes in the estimated salvage value of an asset
- Changes in the estimated warranty liability
- Changes in the estimated bad debt expense

These changes can affect the financial statements in a number of ways. For example, a change in the estimated useful life of an asset will affect the depreciation expense and the carrying value of the asset. A change in the estimated salvage value of an asset will affect the gain or loss on disposal of the asset. A change in the estimated warranty liability will affect the income statement and the balance sheet. And a change in the estimated bad debt expense will affect the income statement.

It is important to note that changes in accounting estimates are not the same as corrections of errors. Corrections of errors are made to correct mistakes that have been made in the financial statements. Changes in accounting estimates, on the other hand, are made to reflect new information or additional experience.

Changes in accounting estimates should be accounted for in the period in which the change is made. The cumulative effect of the change should be reported in the income statement as a separate line item. The change should also be disclosed in the notes to the financial statements.