Which of the following statements is correct?
A) Changes in accounting policy are always handled in the current or prospective period.
B) Prior year statements should always be restated for changes in accounting estimates.
C) A change from the deferral and amortization method to the immediate recognition method of accounting for defined benefit pension plans should be treated as a change in accounting policy.
D) Correction of prior period error should be presented as an adjustment on the current income statement.

Question

Quizplus · Accepted Answer

A) This statement is incorrect as changes in accounting policy can also be handled retrospectively.
B) This statement is incorrect as changes in accounting estimates should only be applied in the current or prospective period, and prior year statements should not be restated.
C) This statement is correct as a change from the deferral and amortization method to the immediate recognition method of accounting for defined benefit pension plans is a change in accounting policy.
D) This statement is incorrect as correction of prior period error should be presented as a separate line item in the current period's financial statements, not as an adjustment on the income statement.

Which of the Following Statements Is Correct