Question

Which of the following changes would not be accounted for using the prospective approach?

Answer 1

Answer: Option A

Explanation:

Prospective approach is used for bring changes into accounts. In the LCNRV rule the accounting principle of lesser value of the stock is so that the amount sold can be mentioned as the net realizable value (NRV). Here the principle of using low cost of net realizable value is known as LCNRV. This cannot be changed using prospective approach.

Other changes such as the depreciation from straight line to double declining depreciation, LIFO from average costing for inventories and other change from double declining to straight line depreciation can be done with the prospective approach.