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Subject Topic: Switching from the cost to equity method (Topic Closed Topic Closed) Post ReplyPost New Topic
  
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EHPReb
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Posted: 27 Feb 2009 at 10:13 | IP Logged  

Per Becker 2007 edition, a change from the cost to the equity method is neither a change in accounting principle nor a change in estimate.  It goes on to say that it is treated a retrospective application.  Is this still the case in the current edition of Becker?  It seems to me that it should be treated prospectively.

Thanks for any feedback.

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divyagovil1
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Posted: 27 Feb 2009 at 11:37 | IP Logged  

Per Becker 2008 edition... A change from the cost to the equity method has to be dealt retroactively.

So, it has to be a change in accounting principle, per my understanding!



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ebonyeyes
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Posted: 27 Feb 2009 at 14:57 | IP Logged  

I remember how this confused me when I got a Becker HW question like this.  According to Becker, a change from the cost method to the equity method was never defined in GAAP literature as a change in accounting principle.  Nonetheless, the change should be treated retrospectively.

So basically, it's an unnamed change that's treated just like changes in accounting principle - you treat it retrospectively.



Edited by ebonyeyes on 27 Feb 2009 at 14:59


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EHPReb
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Posted: 27 Feb 2009 at 15:09 | IP Logged  

I remember how this confused me when I got a Becker HW question like this.  According to Becker, a change from the cost method to the equity method was never defined in GAAP literature as a change in accounting principle.  Nonetheless, the change should be treated retrospectively.

So basically, it's an unnamed change that's treated just like changes in accounting principle - you treat it retrospectively.

Thanks!

 

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utesa
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Posted: 28 Feb 2009 at 01:08 | IP Logged  

I do remember how Becker makes a big deal out of nothing somtimes.

UNLESS you are missing one entire topic, such as consolidation, stockholder's equity and so on do NOT get stcuk in one sbject or topic forever. It is ok to try to understand as much as you can but you must  let go and move on... IF you get a question on this regard first it will be just a question and if it is a problem adjust R/E backward if necessary ... 

Trust me I just took FAR today for the first time and I do regret trying to master some tiny things and leaving mosters  uncovered :(

 

 

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