Mellie Inc. has never recorded an allowance for doubtful accounts. Due to worsening economic conditions, credit losses are determined to be material in the current year. Mellie Inc. sets up an allowance for doubtful accounts for outstanding receivables older than $90$ days at a rate of $10\%.$

Bertin Corp. is a mature, private company and has never been audited. A new investor has requested an audit. The external auditor recommends that inventories be reported at the lower of cost and net realizable value even though Bertin Corp. has always reported inventory at cost$.$ Management has now begun tracking net realizable values of inventory. Approximately $50\%$ of the inventory balance in the current year needs to be adjusted to reflect the lower of cost and net realizable value.

Roman Inc. has used ASPE for the past ten years and has recently adopted IFRS. The company has had to update its bond liability and premium accounts to reflect the effective interest method of amortization, whereas the straight$-$line method has always been used.

Lola Corp., a private corporation, has historically recognized revenue using the same policy it adopted when operations began five years ago. This year, management conducted a thorough review of its accounting policies and has decided to recognize revenue at a later stage than previously because they felt the previous policy allowed for premature revenue recognition.

Bernado Inc. has found in the current year that it has been depreciating one of its assets at a $30\%$ straight$-$line rate when it had intended to depreciate it at $20\%.$ Bernado Inc. has owned the asset for two years. Management feels additional depreciation recorded is immaterial.

Required:

For each scenario determine the type of accounting change and the appropriate treatment and justify your answer.

Why does a change in accounting policy require retrospective treatment, whereas a change in estimate requires only prospective treatment?