Question

The prospective approach usually is required for:

a) a change in reporting entity
b) a change in estimate
c) a change in accounting principle
d) a correction of an error

Answer 1

The prospective approach is usually required for a change in accounting principle.

Step-by-step explanation:

The prospective approach is usually required for a change in accounting principle. When an entity decides to change its accounting principle, it must apply the change prospectively, meaning it should be applied to all future transactions and events. This ensures consistency and comparability in financial statements.