Accounting changes and errors corrections

Question 1

Change in accounting principal inseparable from a change in accounting estimate is treated as?

Answer 1

Change in accounting estimate and its application is prospectively.

Question 2

Whenever it is impossible to determine a change in accounting estimate or a change in accounting principle how should the change be treated?

Answer 2

Change in accounting estimate and it should be treated prospectively

Question 3

How should correction of error should be reported in the financial statements?

Answer 3

Correction of errors should be adjusted to retained earnings net of tax.

Question 4

How should changes in accounting principles be treated?

Answer 4

Changes in accounting principles should be treated Retrospectively and adjust Beg retained earnings for the earliest period presented. Comparative financial statements should be restated. If the change is impractical then the its treated prospectively (i.e a change from FIFO to LIFO)

Question 5

How is the change from a special purpose framework to an accrual basis of accounting treated?

Answer 5

Is treated as a correction of an error and all financial statements are restated.

Question 6

How is a change in accounting entity be treated?

Answer 6

It should be treated retrospectively as if the entities were always reported together.