Identify all false statements about changes in accounting principles and estimates.

1. Investors likely prefer the retrospective approach as it is best for comparability across reporting periods.

2. Companies likely prefer the prospective approach as it is the least costly to apply.

3. Voluntary changes in accounting principle such as inventory-method change and depreciation-method change require the retrospective approach.

4. Change in estimated useful life of equipment should be accounted for prospectively.

5. Good justifications from investors' viewpoint for a voluntary change in accounting principle is that the change increases earnings and is less costly to implement.

6. "Taking earnings bath" is more likely during a good year or the year of management change.

Group of answer choices

3, 5, 6

1, 2, 4

5 & 6

2, 3, 4