Which of the Following Is a Change in Policy

question 17

Multiple Choice

Which of the following is a change in policy?

• A)Inventory was sold below carrying amount even though the inventory had been previously written down to lower of cost and net realizable value.
• B)A company changes from the cost model to the revaluation model of measuring the value of land.
• C)Development costs were capitalized when only five of six criteria for capitalization had been satisfied.
• D)The company miscalculated the weighted average number of ordinary shares outstanding because it used the wrong date for a share issuance.

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Definitions:

Giffen Good

A product that paradoxically sees an increase in demand as its price increases, violating the basic law of demand due to the income effect overshadowing the substitution effect.

Inferior Good

A type of good whose demand decreases as the income of consumers increases, opposite of a normal good.

Substitution Effect

The change in consumption patterns due to a change in the relative price of goods, leading consumers to substitute away from higher-priced goods toward lower-priced ones.

Income Effect

How an adjustment in income levels for individuals or the economy affects the demand for goods or services.