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graymoss27
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| Posted: 21 Jul 2010 at 06:03 | IP Logged
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How do we diffrentiate between accounting principle /
accounting estimate and accounting entity??
Is dep a principle or estimate? other examples would help
?? am confused
regards
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killaking
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| Posted: 21 Jul 2010 at 08:51 | IP Logged
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Depreciation can be either from a principal standpoint straight line to sum of years digits and from an estimate standpoint. For example, you are using straight line on an item and you say the life is 5 years and you change your mind on the "ESTIMATE" and decide it should be 3 years your using the same accounting principal but you change the estimate on the allocation on the deprecition expense. And from a principal standpoint its is for example straight line to sum of years digits. But some can be both I think its LIFO to FIFO is both.
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Tajik4CPA
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| Posted: 21 Jul 2010 at 09:28 | IP Logged
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When judgment is involved then its an estimate. Principle would be like an accounting rule you use it or you don't no judgment involved. Entity relates to equity cost or consolidation imho.
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Easton
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| Posted: 21 Jul 2010 at 13:53 | IP Logged
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warranty expense is another example of an estimate. Principle is like changing from FIFO to LIFO, to percentage of completion, etc.
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now!now!now!
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| Posted: 21 Jul 2010 at 15:05 | IP Logged
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Easton wrote:
| warranty expense is another example of an estimate. Principle is like changing from FIFO to LIFO, to percentage of completion, etc. |
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I thought a change to LIFO was an exception to be treated like a change in estimate - prospectively. Am I wrong?
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Topic: How to differentiate between A/c
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