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Flashcards in Retrospective Application Deck (10):

What is the amount recorded for the change in deferred taxes for a change in accounting principle?

The pretax cumulative effect multiplied by the tax rate


What account records the effect of principle change on prior years?

Retained earnings


What is the amount of the cumulative effect reported in the earliest reported year of the retained earnings statement?

The effect of the change on years before the earliest year reported


What account is debited when an accounting principle change causes income in prior years to decrease?

Retained earnings (cumulative effect of change)


What accounting change is often impracticable to compute a cumulative effect?

Change to Last In First Out (LIFO)


What is the pretax amount of the cumulative effect of a change in inventory method?

The difference in inventory balance for the new and old methods, at the beginning of the year of change.


When an accounting change happens and it is impracticable to determine period specific effects of the change, how is it treated?

Prospectively as of the earliest date possible


What is a change in reporting entity?

1.) Presenting consolidated or combined financials in place of individual financials
2.) Changing the set of subsidiaries that make up a consolidated group
3.) Changing the entities included in combined financials
4.) Change from cost or FV method for accounting to the equity


What accounting treatment does a change in reporting entity use?



What disclosures are required for retrospective application?

1.) Nature of the change and reason for it
2.) Effect of the change on income from continuing operations, net income, OCI and related per share amounts.

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