FAR 1.6 - Accounting Changes & Error Corrections Flashcards
Changes in accounting estimates require what application?
Prospective - implement in current period and continue in future periods
Changes in accounting principle require what application?
Retrospective - adjust beginning Retained Earnings net of tax AND if prior period financials are presented, restate
What are two exceptions to a change in accounting principle that are treated as changes in accounting estimates (prospective)
Changing TO LIFO
And
Change in depreciation method
For error correction, if comparative financial statements are presented and financial statements for the year with the error are present,
Correct the error in those prior financial statements
For error correction, if comparative financial statements are presented and financial statements for the year with the error are not present,
Adjust (net of tax) the opening retained earnings of the earliest year presented