Economics · Accounting Standards and Policies (AS 1)
According to AS 1 (Disclosure of Accounting Policies), if a company changes its accounting policy for providing depreciation (e.g., from Straight Line Method to Written Down Value method), what is the primary disclosure requirement in the financial statements?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The company must restate the financial accounts for the past three years using the new method.
- 2The nature of the change and its material effect on the financial statements for the current period must be explicitly disclosed.✓
- 3The change should be disclosed only if it results in a significant increase in net profit.
- 4No disclosure is required if the change is made at the beginning of the financial year.
Correct answer
The nature of the change and its material effect on the financial statements for the current period must be explicitly disclosed.
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