ACCOUNTING POLICY AND FORECAST CHANGES REGARDING DEPRECIATION PRACTICES: AN EXAMPLE APPLICATION

Abstract

In the process of recording and reporting financial transactions, businesses have to set a policy. In order for financial information users and potential investors to benefit from the information in the financial statements, the applied accounting policies should be consistent over the periods. However, in today's market conditions, changing economic and technological conditions force businesses to make policy and forecast changes. Policy and estimation changes regarding depreciation practices affect many items in the financial statements. In particular, during the policy changes regarding depreciation, the net profit/loss for the period, the previous year's the profit/loss, inventories, cost of goods sold, and distributed/undistributed profit figures vary.