Accounting Changes Prior Period Errors Flashcards
How should the effect of a change in accounting estimate be accounted for?
d. In the period of change and and future periods if the change affects both
Which is characteristic of a change in accounting estimate?
b.It does not effect the financial statements of prior period
A change in the periods benefited by a deferred cost because additional information has been obtained is
a. An accounting change reported in the period of change and future periods if the change affects both
A change in the residual value of an asset arising because additional information has been obtained is
a. An accounting change reported in the period of change and future periods if the change affects both
Why is retrospective treatment of change in accounting estimate prohibited?
a. A change in accounting estimate is a normal recurring correction or adjustment.
The change in accounting policy policy inseparable from a change in accounting estimate should be reported
c.the period of change and future periods if the change affects both.
Which should be reported when an entity changed from straight line depreciation to double declining?
d. An accounting change that should be reported currently and prospectively
Which is not a justification for a change in depreciation method?
c.To conform with the depreciation method prevalent in a particular industry
Which is the first step within the hierarchy of guidance when selecting accounting policies?
a. Apply a standard from IFRS if it specifically relates to the transaction.
In the absence of an accounting standard that applies specifically to a transaction, what is the most authoritative source in developing and applying an accounting policy?
a. The requirement and guidance in the standard or interpretation dealing with similar and related issue.
A change in accounting policy shall be made when
I. Required by law.
II. Required by an accounting standard or an interpretation of the standard.
III. The change will result in more relevant or reliable information about the financial position, financial performance and cash flows of the entity.
b. II and III only
Why is an entity permitted to change an accounting policy?
b. The change would result in the financial statements providing more reliable and relevant information about financial position, financial performance and cash flows.
A change in accounting policy requires what kind of adjustment to the financial statements?
c.Retrospective adjustment
A change in accounting policy requires that the cumulative effect of the change for prior periods should be reported as an adjustment to
a. Beginning retained earnings for the earliest period presented.
A change in accounting policy includes all of the following except
d. A change from one method of depreciation to a different method of depreciation.
Which of the following should be treated as a change in accounting policy?
b. a change from cost model to fair value model in measuring investment property
When it is difficult to distinguish a change in accounting policy from a change in accounting estimate, the change is treated as
a. Change in accounting estimate with appropriate disclosure
An entity that changed an accounting policy voluntarily should
b. Account for the change retrospectively.
Which statement best describes prospective application?
c.Applying a new accounting policy to transactions occurring after the date the policy is changed.
Which describes applying a new accounting policy to transactions as if that policy had always been applied?
a. Retrospective application
This means correcting the recognition, measurement and disclosure of amounts of elements of financial statements as if a prior period error had never occurred.
b. Retrospective restatement
