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In this video tutorial, the speaker explains how to account for changes in accounting estimates, which are critical in management decision-making. Managers often need to estimate figures such as bad debt, useful life, and salvage value of assets, as well as warranty liabilities. When their estimates prove inaccurate, adjustments are necessary. The speaker introduces "prospective application," a method where errors are corrected moving forward without restating prior financial statements. For example, if the useful life of an asset is adjusted from 16 to 20 years, the depreciation calculation is simply updated and applied henceforth.