a) In recent years, the financial press has indicated that many companies have changed their accounting policies. What are the major reasons why companies change accounting policies? 

b) State how each of the following items is reflected in the financial statements.

i. Change from FIFO to average-cost method for inventory valuation purposes.

ii. Charge for failure to record depreciation in a previous period.

c) Discuss briefly the three approaches that have been suggested for reporting changes in accounting policies.

d) Identify and describe the approach the IASB requires for reporting changes in accounting policies.

e) Lenexa State Bank has followed the practice of capitalizing certain marketing costs and amortizing these costs over their expected life. In the current year, the bank determined that the future benefits from these costs were doubtful. Consequently, the bank adopted the policy of expensing these costs as incurred. How should the bank report this accounting change in the comparative financial statements?

Answer rating: 100% (QA)

a I To show the accuracy of the profit made by the company ii To comply with the industry best practices iii To increase cash flows through the reduct... View the full answer