When it is impossible to determine whether a change in principle or change in estimate has occurred, the change is considered a change in estimate.

Question

Quizplus · Accepted Answer

When distinguishing between a change in accounting principle and a change in estimate is difficult, accounting standards typically require the change to be treated as a change in estimate. This approach is due to the often forward-looking and judgment-based nature of estimates, which can evolve with new information or circumstances.

When It Is Impossible to Determine Whether a Change in Principle