Question

Which of the following is a condition in which retrospective application is not

impracticable?
A. The company cannot determine the effects of retrospective application.
B. Retrospective application requires assumptions about management's intent in a prior period.
C. The company has changed auditors.
D. Retrospective application requires significant estimates for a prior period, and the company cannot objectively verify the necessary information to develop these estimates.

Answer 1

The impracticability of retrospective application does not depend on the fact that a company has changed auditors. It is more about the ability to obtain objective, verifiable information, or determining the effects of such an application.

Step-by-step explanation:

Retrospective application is a concept where past data is used to assess or implement changes, typically in accounting or reporting standards, whereas prospective application refers to applying new changes going forward from a specific date. In the context of this question, if a company cannot determine the effects of retrospective application or cannot objectively verify the necessary information to develop significant estimates, then retrospective application would indeed be considered impracticable. However, if a company has changed auditors, this does not inherently make retrospective application impracticable. Thus, a condition in which retrospective application is not impracticable is option C. The company has changed auditors.