Multiple choice

If the change in accounting policy has no material effect in current period but which is reasonably expected to have a material effect in later periods, then

  1. the amount of change should be disclosed

  2. the fact of change should be disclosed

  3. the fact of change should not be disclosed

  4. all of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

When a change in accounting policy has NO material effect in the current period but is REASONABLY EXPECTED to have material effect in later periods, AS-10 (Accounting for Changes in Accounting Policies) requires that the FACT of the change should be disclosed. You don't need to quantify the impact (since it's immaterial now), but you must inform users that the policy has changed so they can anticipate future material effects. This ensures transparency and allows users to make informed decisions. Option A (amount of change) suggests quantification, which is not required when current effect is immaterial. Option C (not disclosed) is clearly wrong.

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