I believe that companies should be expected to report changes expected in
subsequent years so that they are providing their investors and any other users
the most accurate and transparent information. As the article points out,
investors who initially learn of an accounting change store that information in
long-term memory but gradually forget about the change over time and
increasingly fail to adjust valuation judgements in subsequent periods (Emett
& Nelson, 2017, p. 52). If these changes and their impacts were included in
future financial statements, the users would be able to make better judgements
when evaluating the company’s current and future financial health.
The primary objective of financial reporting is to provide useful information
about a company that assists investors, lenders, and other creditors in making
decisions about providing resources to the company (Whalen et al, 2017, ch.
22). Providing a multiperiod disclosure of accounting changes would be useful
to investors and other users. They would be able to compare the information
across multiple periods to help them see what change was made and how it
affects the company and shareholders. It allows for a more accurate and
thorough analysis.
Reference
Emett, S., & Nelson, M. (2017). Reporting accounting changes and their
multi-period effects. Science Direct. https://www-sciencedirect-
com.ezproxy.snhu.edu/science/article/pii/S0361368217300144?via%3Dihub
Whalen, J. M., Jones, J. P., & Pagach, D. P. (2017). Intermediate Accounting:
Reporting and Analysis (2nd ed.). Cengage Learning
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