Changes in Estimate Caused by a Principle Change
Special Hybrid Situation
Some accounting changes involve both a new accounting principle and a revised estimate. The most common example is changing a depreciation method.
Although depreciation methods are accounting principles, changing methods reflects new expectations about how an asset provides economic benefits. Therefore, GAAP treats these changes prospectively as changes in estimate.
Note
A change from straight-line depreciation to double-declining balance is treated prospectively, not retrospectively.
Summary
Certain principle changes that are inseparable from revised estimates receive prospective treatment.