Which of the following requires recognition in the auditor's opinion as to consistency?
A) the correction of an error in the prior year's financial statements resulting from a mathematical mistake in capitalizing interest
B) a change in the estimate of provisions for warranty costs
C) the change from the cost method to the equity method of accounting for investments in common stock
D) a change in depreciation method which has no effect on current year's financial statements but is certain to affect future years

Question

Quizplus · Accepted Answer

A change from the cost method to the equity method of accounting for investments in common stock is a change in accounting principle that requires recognition in the auditor's opinion as to consistency. The other options are either immaterial or not a change in accounting principle.

Which of the Following Requires Recognition in the Auditor's Opinion