If for a Class a Non-Current Asset an Entity Changes

question 17

Multiple Choice

If for a class a non-current asset an entity changes from using the sum-of-the-years-digits method to the straight-line method to allocate the depreciable amount, then:

• A)the change is applied retrospectively because it is a change in accounting policy
• B)the change is applied retrospectively because it must be a correction of a prior period error
• C)it is applied prospectively as it is a change in an accounting estimate
• D)is not permitted because it will conflict with the method applied in calculating the comparative amounts

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Definitions:

Coupon Payments

Periodic interest payments made to bondholders, typically expressed as a fixed percentage of the bond's face value.

Effective Yield

Effective yield is the total yield of an investment, taking into account the effect of compounding interest over the period.

NPV Calculation

The process of determining the Net Present Value of a series of cash flows by discounting them to their present value using a specific rate.

Interest Charges

Costs incurred for borrowing money, calculated as a percentage of the principal amount over a given period.