Q1.. YooHoo Co bought a significant item of plant for $240,000 in January 20X0. At the acquisition date management set the useful economic life at 6 years. In 20X1, it is decided that a life of 4 years would have been more appropriate. How should YooHoo Co treat this?

This is a change of accounting policy and should be adjusted prospectively. Do not change prior year. In 20X1 and going forward take the carrying amount of $200,000 and depreciate over the remaining useful life of 3 years

This is a change of accounting policy and should be adjusted retrospectively - restate prior year to show a depreciation charge of $60,000 rather than $40,000. The depreciation charge in 20X1 and going forward will also be $60,000

This is a change of accounting estimate and should be adjusted prospectively. Do not change prior year. In 20X1 and going forward take the carrying amount of $200,000 and depreciate over the remaining useful life of 3 years

This is a change of accounting estimate and should be adjusted retrospectively - restate prior year to show a depreciation charge of $60,000 rather than $40,000. The depreciation charge in 20X1 and going forward will also be $60,000