A Company Recognizes a Change in Estimate by Making a Retrospective

question 8

True/False

A company recognizes a change in estimate by making a retrospective adjustment to the financial statements.

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Definitions:

Fair Value

An estimate of the price at which an asset or liability could be traded in a fair transaction between willing parties, neither under compulsion to act.

Equity Method

An accounting technique used by a company to record investments in other companies, where the investment is initially recorded at cost and adjusted thereafter for the post-acquisition change in the investor’s proportion of net assets in the investee.

Investor Corporation

Typically refers to a company whose primary business is holding, investing in, and managing securities for investment purposes.

Dividends

Payments made by a corporation to its shareholders from the company's profits or reserves.