Under ASC 250-10-45-17 a change in an asset's useful life is a change in estimate: the carrying amount on the date of the change is depreciated over the revised remaining life, prior periods are not restated, and the effect is disclosed if material. Tax lives are fixed by the MACRS class and do not change.
A useful life is an estimate, and estimates change prospectively.
Under ASC 250-10-45-17, a change in the estimated useful life or salvage value of a depreciable asset is a change in accounting estimate. It is accounted for in the period of change and future periods: the carrying amount at the date of the change is depreciated over the revised remaining life. Prior periods are not restated and there is no cumulative catch-up. The same applies to a change in depreciation method, which ASC 250-10-45-18 treats as a change in estimate effected by a change in principle, and to a change from one estimate to another for a class of assets. The effect on income is disclosed if material (ASC 250-10-50-4).
| Line | Amount |
|---|---|
| Cost, placed in service January 2022, book life 10 years straight line, no salvage | 120,000.00 |
| Depreciation, 2022 to 2025 (four years at 12,000.00) | 48,000.00 |
| Carrying amount at 1 January 2026 | 72,000.00 |
| Remaining life before the review | 6 years |
| Remaining life after the review (obsolescence confirmed by engineering in December 2025) | 3 years |
| Depreciation 2026 to 2028 (72,000.00 over 3 years) | 24,000.00 a year |
| Federal MACRS depreciation, 7-year class, unchanged | as scheduled |
When a life should be reviewed.
- Physical evidence: wear beyond expectation, a maintenance history that says the asset will not last, or the reverse.
- Technological or commercial obsolescence: the line it serves is being replaced, a regulation is changing, a supplier has withdrawn support.
- A plan to dispose of the asset earlier than expected, which also raises the impairment question the ASC 360 article describes.
- Experience with the class: if the vehicles are all retired at seven years, a ten-year policy is wrong for the class, not just the vehicle.
Tax lives do not change.
The federal recovery period is fixed by the asset's MACRS class, not by the taxpayer's expectation, so a revised book life changes nothing in the federal or state books; it changes the book-tax difference and the deferred tax. The register records the change on the book basis only: the date, the old and new remaining life, the reason and the approval, and the audit trail keeps the previous value. A life changed without a reason is a question at the audit; a life changed with the engineering report attached is an answer.
| When | User | Record | Field | Before | After | Reason |
|---|---|---|---|---|---|---|
| 30 Sep 2026 16:41 | M. Reyes | Period | Period 9 | Open | Depreciation posted | Mass recalculation, 1,203 assets |
| 12 Sep 2026 14:02 | M. Reyes | 10577 | Status | In service | Disposed, sale | Replaced by unit 9 |
| 12 Sep 2026 13:55 | M. Reyes | CIP-0155 | Status | In progress | Capitalised as 10744 | Dock doors in service |
| 10 Sep 2026 09:18 | J. Okafor | 10412 | Federal convention | Half-year | Half-year (re-tested) | 40% rule check, Q3 |
| 03 Sep 2026 11:30 | Import | 27 assets | Created | From AP export 88213 to 88266 | Additions queue approved by J. Okafor | |
| 29 Aug 2026 15:07 | K. Lindqvist | 10240 | Cost | 9,600.00 | 9,840.00 | Freight added, invoice 88266 |
What to record on the asset.
- The date of the change and the carrying amount on that date.
- The old and the new remaining life, and the salvage value if that changed too.
- The reason, with the evidence: engineering review, disposal plan, class experience.
- The approval, and the disclosure if the effect is material.
- No change to the tax books, and the revised book-tax difference.
In Fixed Asset Desk: a remaining life is an override on the book basis with the user, the date, the previous value and the reason kept on the audit trail; depreciation recalculates prospectively from the effective date.
Sources: FASB ASC 250-10-45-17 to 45-18 and 250-10-50-4 (accounting changes and error corrections); FASB ASC 360-10-35-4 (depreciation). Checked 20 September 2026.