Reporting Accounting Changes

Instructions

This is for a discussion post, so it does not need to be cited, and can be more in your own words, not formal. Accountants are responsible for ensuring alignment with various standards, including GAAP and IFRS, as well as satisfying the needs of various other users of financial statements (and potentially others, depending on the nature of the business they work for.) The article Reporting Accounting Changes and Their Multi-period Effects discusses why firms are not required to disclose information for years subsequent to a change, even when the impacts of the change span multiple years. Review the article and discuss the following, providing examples to support your ideas:Should companies be expected to report the impact of changes expected in subsequent years, especially if they have multiperiod impacts? Why or why not?Would multiperiod disclosure of accounting changes be useful to investors and other users? Why or why not?Here is the link to the article:https://www-sciencedirect-com.ezproxy.snhu.edu/science/article/pii/S0361368217300144?via%3Dihub

Answer

Question 1Companies should report the impact of changes expected in subsequent years, especially if they have multiperiod impacts. The firms must report these possible changes, particularly if they are sure of the likelihood of their impact on the financial statement. For example, the disclosure should be mandatory in instances where changes in these items could have material effects. Typically, the inclusion of the transactions, when the company is sure of its occurrence could have a huge impact on its performances. For instance, if a business has a case in court but does not maintain a contingent liability account, reflecting the outcome of the case would have a huge impact on the net profit. This situation happens especially in the scenario, where the business loses a case. Reporting th...
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