When a Company Decides to Switch from Deferring Development Costs

question 24

Multiple Choice

When a company decides to switch from deferring development costs to expensing them immediately, this change should probably be treated as a

• A) change in accounting policy.
• B) change in accounting estimate.
• C) prior period adjustment.
• D) correction of an error.

---

Definitions:

Current Yield

The current yield is a financial metric that calculates the annual income (interest or dividends) an investment generates, divided by its current price.

Yield to Maturity

The complete yield expected from a bond assuming it is retained until it matures.

Yield to Call

The rate of return anticipated on a bond if it is held until the call date, which is before the bond's maturity, including all interest payments and the call price.

Yield to Maturity

The total return anticipated on a bond if it is held until the date of maturity, accounting for interest payments and capital gains.