Answer
Circumstances in which estimates may affect amounts presented in the balance sheet.
1. Warranty returns.
2. Allowance for doubtful accounts.
3. Estimated salvage values as well as depreciable lives for equipment and plant.
4. Calculating unearned revenue
Work Step by Step
Where estimates are necessary, there is always subjectivity in generating the values. Such subjectivity can alter the usefulness and reliability of financial information.
