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Q5ISTQ.

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Intermediate Accounting (Kieso)
Found in: Page 1328

Short Answer

Which of the following is true regarding whether IFRS specifically addresses the accounting and reporting for effects of changes in accounting policies?

Direct effects Indirect effects

(a) Yes Yes

(b) No No

(c) No Yes

(d) Yes No

The correct answer is option (d)— yes for the direct effect and no for indirect effect.

See the step by step solution

Step by Step Solution

Step 1: Correct Option

The correct answer is option (d)

Step 2: Explanation

There will be a direct effect when there is a change in accounting principle but the IFRS does not explicitly address the accounting and the disclosure of the indirect effect of the change in accounting principle.

Step 3: Explanation for false options

The IFRS only addresses the accounting and reporting for effects of changes in accounting policies in direct effects but not an indirect effect.

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