Question:
Accountants very often are required to make estimates, and very often those estimates prove incorrect. In
what period(s) is the effect of a change in an accounting estimate reported?
Answer:
A change in accounting estimate is accounted for in the year of the change and in subsequent periods;
prior years’ financial statements are not restated. A disclosure note should justify that the change is
preferable and should describe the effect of a change on any financial statement line items and per share
amounts affected for all periods reported.
Accountants very often are required to make estimates, and very often those estimates prove incorrect. In
what period(s) is the effect of a change in an accounting estimate reported?
Answer:
A change in accounting estimate is accounted for in the year of the change and in subsequent periods;
prior years’ financial statements are not restated. A disclosure note should justify that the change is
preferable and should describe the effect of a change on any financial statement line items and per share
amounts affected for all periods reported.
