Accounting Changes

Question 1

Under U.S. GAAP, an exception is allowed for the “impracticality” of calculating the impact of changes in accounting principles. For which category does IFRS allow an exception of “impracticality”?

Answer 1

Changes in accounting principles and correction of errors

Question 2

Which of the following statements is correct as it relates to changes in accounting estimates?

Answer 2

Whenever it is impossible to determine whether a change in accounting estimate or a change in accounting principle has occurred, the change should be considered a change in estimate.

It is part of income from continuing operations because no special disclosure is required

Question 3

The cumulative effect of a change in accounting principle should be recorded separately as a component of income after continuing operations, when the change is from the

Answer 3

issuance of a new FASB Statement (SFAS) that requires the use of the new method and specifies that the change be recognized by including cumulative effect (net of income taxes) in net income

Question 4

How to calculate change in accounting estimate Depreciation

Answer 4

Depreciate old value as normal

Take the remaining carrying value and subtract the salvage value. Take that remaining amount and divide it by the new remaining depreciation years left.

Question 5

A change in the periods benefited by a deferred cost because additional information has been obtained is

Answer 5

An accounting change that should be reported in the period of change and future periods if the change affects both

Question 6

A change in Salvage Value is considered

Answer 6

A change in Accounting Estimate