Which of the following describes a change in reporting entity?
a. A manufacturing entity expands its market from regional to nationwide.
b. An entity presents consolidated financial statements in place of individual financial statements.
c. An entity acquires additional shares of an investee and changes to the equity method of accounting
d. An entity discontinues a product line
 

 

During the current year, the entity voluntarily changed its accounting method because the new method will provide more reliable and relevant information. The entity can estimate the effects of the change. How should the entity treat the change in accounting policy?
a. On a prospective basis
b. By restating the financial statements
c. By a cumulative adjustment on the income statement
d. On a retrospective basis

 

 

A change in the residual value of an asset depreciated on a straight-line basis arising because additional information has been obtained is
a. A correction of an error
b. Not an accounting change
c. An accounting change that should be reflected in the period of change and future periods if the change affects both
d. An accounting change that should be reported by restating the financial statements of all prior periods presented.

 

 

Under IFRS, a change in accounting estimate is accounted for
a. Retrospectively
b. As a cumulative effect of an accounting change in the income statement
c. Currently in the financial statements.
d. Prospectively in the period of change and future periods.

Which of the following describes a change in reporting entity?
b. An entity presents consolidated financial statements in place of individual financial statements.

 

During the current year, the entity voluntarily changed its accounting method because the new method will provide more reliable and relevant information. The entity can estimate the effects of the change. How should the entity treat the change in accounting policy?
d. On a retrospective basis

A change in the residual value of an asset depreciated on a straight-line basis arising because additional information has been obtained is
c. An accounting change that should be reflected in the period of change and future periods if the change affects both

Under IFRS, a change in accounting estimate is accounted for
d. Prospectively in the period of change and future periods.

Step-by-step explanation

Which of the following describes a change in reporting entity?
a. A manufacturing entity expands its market from regional to nationwide. - not an accounting change
b. An entity presents consolidated financial statements in place of individual financial statements. - change in reporting entity
c. An entity acquires additional shares of an investee and changes to the equity method of accounting - change in accounting policy
d. An entity discontinues a product line - not an accounting change
 

During the current year, the entity voluntarily changed its accounting method because the new method will provide more reliable and relevant information. The entity can estimate the effects of the change. How should the entity treat the change in accounting policy?
A change in accounting policy, if applicable, shall be applied as a cumulative change in the beginning retained earnings of the earliest period presented. This is called a Retrospective Application.

A change in the residual value of an asset depreciated on a straight-line basis arising because additional information has been obtained is
A change related to depreciation is considered a change in accounting estimate which is accounted as a Prospective Application. 

c. An accounting change that should be reflected in the period of change and future periods if the change affects both - this represents the prospective application

Under IFRS, a change in accounting estimate is accounted for
Same explanation with the third question.