FAR 1.6 - Accounting Changes & Error Corrections Flashcards

1
Q

Changes in accounting estimates require what application?

A

Prospective - implement in current period and continue in future periods

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2
Q

Changes in accounting principle require what application?

A

Retrospective - adjust beginning Retained Earnings net of tax AND if prior period financials are presented, restate

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3
Q

What are two exceptions to a change in accounting principle that are treated as changes in accounting estimates (prospective)

A

Changing TO LIFO
And
Change in depreciation method

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4
Q

For error correction, if comparative financial statements are presented and financial statements for the year with the error are present,

A

Correct the error in those prior financial statements

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5
Q

For error correction, if comparative financial statements are presented and financial statements for the year with the error are not present,

A

Adjust (net of tax) the opening retained earnings of the earliest year presented

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