Note 2, Basis of Presentation (part d), in Reitmans (Canada) Limited's financial statements states: "The preparation of the financial statements in accordance with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, the disclosure of contingent assets and contingent liabilities at the date of the financial statements and reported amounts of revenues and expenses during the period."
Instructions
Explain why Reitmans' management is required to use estimates in the company's financial statements. Support your answer with reference to the objective of financial reporting and the qualitative characteristics.
Taking It Further
Which qualitative characteristics may be sacrificed when management is required to make estimates in the financial statements that may diff er materially from actual results?