Question
Are accounting changes permitted in financial statements? A. Accounting changes are permitted as long as there is adequate accounting and disclosure of the change that
Are accounting changes permitted in financial statements?
A.
Accounting changes are permitted as long as there is adequate accounting and disclosure of the change that will enable the financial statement user to restore comparability with prior periods. Accounting changes in estimate also must be justified by management. A company should only voluntarily change an accounting estimate if it can justify the new estimate on the basis that it more accurately portrays the company's financial position and operating performance. Accounting changes in estimate should be limited in number to ensure comparability of the financial statements.
B.
Accounting changes are permitted as long as the changes can be made retrospectively. If retrospective changes are not practical, or the financial statement effects are indeterminable, the changes should not be made.
C.
Accounting changes are permitted as long as there is adequate accounting and disclosure of the change that will enable the financial statement user to restore comparability with prior periods. Accounting changes in principle also must be justified by management. A company should only voluntarily change an accounting principle if it can justify the new principle on the basis that it more accurately portrays the company's financial position and operating performance. Accounting changes in principle should be limited in number to ensure comparability of the financial statements.
D.
Accounting changes are permitted as long as the changes can be made prospectively. If prospective changes are not practical, or the financial statement effects are indeterminable, the changes should not be made.
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