An adjustment that is made to an accounting estimate as a result of new information or developments including those relating to measurement and subsequent measurement (e.g., information affecting the carrying amount of assets/ liabilities, the amount of periodic consumption of assets, in view of an assessment of present status/ expected future benefits and obligations associated with such items, etc.)
Changes in accounting estimates result from the lack of certainty as to specific aspects of an entity’s business and activities/ operations, which in turn impacts its ability to measure specific transaction and events with precision. Estimates are management’s judgments compiled using available information that meet the criteria of novelty and reliability. Such estimates include the fair value (FV) of financial assets/ liabilities, the useful lives of depreciable assets, bad debts, inventory obsolescence, etc.
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