Question: Interpreting Disclosures of Accounting Changes: Exercise 6-3 Financial Statement Analysis 11 th edition K.R Subramanyam There are various types of accounting changes requiring different types

Interpreting Disclosures of Accounting Changes: Exercise 6-3

Financial Statement Analysis 11^th edition K.R Subramanyam

There are various types of accounting changes requiring different types of reporting treatments. Understanding the different changes is important to analysis of financial statements.

Required:

Discuss how companies might time the adoption of mandatory accounting changes for their own benefit.

Discuss how the adoption of mandatory accounting changes can create an opportunity to establish a hidden reserve. Cite examples.

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