QS $11-20($Algo$)$ Accounting for changes in estimates; error adjustments LO C$3$

For each situation, identify whether it is treated as a prior period adjustment or change in accounting estimate.

After using equipment for the past six years, which had an estimated useful life of ten years and no salvage value, the company revaluates the equipment and now estimates the salvage value to be $$10,000.$

An assessment of expenses uncovers that the company incorrectly capitalized research and development costs three years ago. This error had a material effect on financial statements.

A review of notes payable discovers that three years ago the company reported the entire amount of a payment $($principal and interest$)$ on an installment note payable as interest expense. This mistake had a material effect on net income in that year.