CPAnet Forum: Accting for Changes in Accting Principle

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Topic: Accting for Changes in Accting Principle (

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Celyn
Major Contributor

Joined: 17 Sep 2010
Online Status: Offline
Posts: 329

Posted: 02 Nov 2010 at 19:56 \| IP Logged

I don't really understand this. All my book says is FAS
154 now requires retrospective applications to prior
periods' financial statements of changes in accounting
principle, unless is it impracticable to determine either
the period-specific effects or the cumulative effects of
the change. I keep missing HW questions related to this
and all it says is this over and over. Can someone explain
this to me more better? Thanks.

ccaml
Contributor

Joined: 26 Aug 2010
Online Status: Offline
Posts: 53

Posted: 02 Nov 2010 at 20:07 \| IP Logged

Restate all the prior financial statements. When FS are presented, the restatement accumulated results reflect in the first comparative year's beginning retain earnings. For example, business started in 2005, financial principle changes made in 2009. All FS from 2005-2008 have to be restated according to the new rule. If you present FS of 2007, 2008, and 2009, 2005-2006's changes reflect in 2007's beginning retain earnings.

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