If a corporation changes from reporting investments on the cost basis to reporting on the equity basis, the prospective approach of reporting must be used.

Name: If a corporation changes from reporting investments on the cost basis to reporting on the equity basis, the prospective approach of reporting must be used.
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Question

Quizplus · Accepted Answer

The change from cost basis to equity basis is a change in accounting principle, which requires retrospective application, not prospective.

If a Corporation Changes from Reporting Investments on the Cost