Estimates always involve subjective judgement and accountants will apply their own expertise when coming up with a suitable estimate. Examples of accounting estimates are accounts receivables (when not sure when the bills are not going to be paid – based on contractual payment terms – typically range from 15-90 days), inventory (its value could potentially change daily – estimate its value using LIFO (last in, first out) or FIFO (first in, first out), depreciation (is an estimation of financial requirements – to have the asset valued periodically), and goodwill (should look at qualitative factors when estimating the value of goodwill) (Chron, 2018), It is unethical for an accountant to use estimates and varying methodology to achieve desired corporate results because there are certain rules that need to be followed. It may require certain manipulation to achieve the corporates desired results.

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It is not unethical for an accoutant to use estimates which are followed consiten... View the full answer