Card Set Information
What are the 3 types of accounting changes?
Change in acct'g principle
Change in Acct'g estimate
change in reporting entity
Are errors considered an accounting change?
Give an example of a change in accounting principle
Average cost to LIFO
completed-contract to % of completion
What approach is taken for a change in accounting principle?
A retrospective approach. Prior financial statements must be adjusted so that they can be compared better
Give an example of a change in estimate
useful lives of assets
salvage value of assets
change in depreciation methods
How are changes in estimate approached?
On a prospective basis. Changes in estimates are accounted for in the current period and any future periods
What is an example of a change in reporting entity?
consolidated statements instead of individual company statements
changing companies included in financial statements
changing subsidiary companies in a consolidation
How are changes in reporting entity approached?
Changes in reporting entity are accounted for retrospectively. The financial statements of all prior periods presented must reflect the change.