The use of estimates does not necessarily violate objectivity. If it is not possible to determine the exact amount of an expense and/or liability within a reasonable time, estimates may be necessary. In that situation, objectivity is met when the estimated amounts are similar to the amounts that another professionally-trained person would also compute with the same available information.
The accounting principles, guidelines and characteristics often involve some degree of trade-offs. For example, a company’s financial statements are expected to be both timely and precise. Unfortunately, achieving timeliness and relevance may require sacrificing some precision and reliability.
