D is corrent. Faithful representation is that the information depicts what it purports to represent. It has three subcomponents: completeness, neutrality, and free from error. Neutrality means that information should not be prepared or reported in such a way as to obtain a predetermined result. Also, the information should be free from bias. D is corrent because management’s estimate violates the characteristics of neutrality and verifiability. Property should be valued at its carrying amount on the financial statements, not management’s estimates of market value. Completeness requires that information is presented or depicted in such a way that users can understand the item being depicted free from error is that no errors or omissions in the information are reported.
A is incorrect because faithful representation is not violated.
B is incorrect because if financial statements are issued late, this violates the characteristic of timeliness, which is an enhancing qualitative characteristic.
This answer is not a violation of faithful representation because the same information is simply being reported to two different groups (i.e., shareholders and financial analysts), which is acceptable.
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