Changes in Accounting Estimates

Introduction to Changes in accounting estimates

Managers are generally needed to make several estimates while preparing financial Statements. These estimates might require revision in the light of new information. If a revised estimate influences assets, liabilities or equity, it has to be adjusted in the period of the change. If it influences the profit, it should be revised in the period affected. This might be in the period of change and/or in future periods.

Both the nature and amount of a change in estimate influencing the current period or future periods should be disclosed. If it is not viable to estimate the amount, this fact must be disclosed.

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