A company has been using the fair-value method to account for its investment. The company now has the ability to significantly influence the investee and the equity method has been deemed appropriate. Which of the following statements is true?

Question

Business

Kyan Cook

26 February, 10:35

A company has been using the fair-value method to account for its investment. The company now has the ability to significantly influence the investee and the equity method has been deemed appropriate. Which of the following statements is true?

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Answers (1)

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Lizbeth Chandler · Answer 1

There has to be a conditional change to the accounting principle.

Explanation:

A direct result of an adjustment in the accounting norm is a negotiated enhancement of an asset or duty that is required to impact the modification. They are allowed to apply a change in the financial reporting standard to all previous years wrongly unless this is not practicable. Implementation of a commonly accepted rules that is distinct from the one applied historically.

An example of a change in accounting standards is to change stock systems, such as switching from a LIFO base to another stock.