Final answer:
Significant estimates in financial statements should be disclosed when there is a reasonable possibility that the estimate might change soon and the impact of that change is material.
Step-by-step explanation:
Significant estimates should be disclosed in the notes to the financial statements (FS) when it is reasonably possible that the estimate will change in the near term and that the effect of the change will be material. Disclosures provide users of financial statements with comprehensive information and facilitate a better understanding of the estimates embedded within the financial statements. Moreover, such disclosures are essential because estimates involve judgments based on the latest available, reliable information and they have the potential to influence decision-making by users of financial reports.