Question
When the SBW Co.began business, it included such indirect costs of manufacturing as janitorial expenses, depreciation of machinery, and insurance on the factory building as
When the SBW Co.began business, it included such indirect costs of manufacturing as janitorial expenses, depreciation of machinery, and insurance on the factory building as inventory costs. At the beginning of the current year, SBW began expensing all insurance costs when they are incurred. SBW must justify and disclose the reason for the change. The most appropriate reason is that the new principleA.
Is easier to apply because no assumptions about allocation must be made.
B.
Has been and continues to be the treatment used for tax purposes.
C.
Constitutes an improvement in financial reporting.
D.
Is one used by the entity for insurance costs other than those on factory-related activities.
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