03-17-2008, 10:09 PM
<font color="navy"></font id="navy"><font size="3"></font id="size3"><font face="Century Gothic">Dear KamranACA,
As you know, a change in accounting policy also results in financials statements providing more relevant and reliable information.
In my opinion this should be accounted for as a change in Accounting policy and applied restrosepctively. The reasons which come to my mind is that this change implies a revision in the basis for the measurement of stock and any change in the measurement bases falls under a change in accounting policy.
Further argument could be that if it is treated as a change in Accounting estimate it may give rise to income statement volatility. Reporting entities may manipulate their results by changing the cost formula.
But as you said, this is equivocal.</font id="Century Gothic">
As you know, a change in accounting policy also results in financials statements providing more relevant and reliable information.
In my opinion this should be accounted for as a change in Accounting policy and applied restrosepctively. The reasons which come to my mind is that this change implies a revision in the basis for the measurement of stock and any change in the measurement bases falls under a change in accounting policy.
Further argument could be that if it is treated as a change in Accounting estimate it may give rise to income statement volatility. Reporting entities may manipulate their results by changing the cost formula.
But as you said, this is equivocal.</font id="Century Gothic">
