when an estimation is made it should be disclosed to financial statement users for clarity 1
examples of inherent riskinherent risk is often present when a company releases forward looking financial statements either to internal investors or the public as a whole forward looking financials by nature rely on management s estimates and value judgments which pose an inherent risk the same applies to accounts that require approximations or value judgments by management fair value accounting estimates are tricky to make and can be highly subjective 