Which of the Following Is a Change in Estimate

question 45

Multiple Choice

Which of the following is a change in estimate?

• A) A change from the full costing method in the extractive industries.
• B) A change from recognizing construction contract revenue over time to recognizing revenue at a point in time.
• C) Consolidating a subsidiary for the first time.
• D) A change in the termination rate of employees under a pension plan.

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Definitions:

Interest Expense

The cost incurred by an entity for borrowed funds, reflected as a financial charge in the income statement over the period of borrowing.

Interest Revenue

Income earned on investments like savings accounts, certificates of deposit, and bonds, typically presented within non-operating income on the income statement.

Current Ratio

A measure of liquidity calculated by dividing a company's current assets by its current liabilities, indicating how well it can cover its short-term obligations.

Capital Lease

A lease agreement that transfers substantially all the risks and rewards of ownership of the asset to the lessee, and is recorded as an asset and liability on the balance sheet.