Question

The effect of a change in accounting principle that is inseparable from the effect of a change in accounting estimate should be reported: Group of answer choices
a.As a separate disclosure after income from continuing operations, in the period of changeand future periods if the change affects both.
b.As a component of income from continuing operations, in the period of change and fu-ture periods if the change affects both.
c.As a correction of an error.
d.By restating the financial statements of all prior periods presented

Answer 1

Answer:

B. As a component of income from continuing operations, in the period of change and future periods if the change affects both.

Explanation:

Option A - The effect of a change in accounting principle cannot be reported in the disclosure after income from continuing operations.

Option B - It is the answer because the accounting estimates should be reported as a component of income from continuing operations. It changes the overall accounting reporting treatment as a change in estimates.

Option C - Accounting estimates cannot be reported as a correction of an error as it is a component of income from continuing operations.

Option D - It cannot be the answer because accounting estimates can help to change the prospective years financial statement not the restating of current year's financial statements of all prior periods.