U.S. GAAP Codification of Accounting Standards Guide by AccountingINFO.com

U.S. GAAP Codification of Accounting Standards

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U.S. GAAP Accounting Standards
Codification Topic 250: Accounting Changes and Error Corrections

Codification Topic 250
Accounting Changes and Error Corrections

Accounting Changes and Error Corrections

SFAS 154, May 2005
"Accounting Changes and Error Corrections - a replacement of APB Opinion No. 20 and FASB Statement No. 3"

Change in accounting principle
1. "Retrospective" application
--> Apply new accounting principle
--> to all prior periods presented
2. At the beginning of the first period presented
--> Cumulative effect will be reflected on the beginning balances
--> of assets, liabilities, and retained earnings
3. Balances of all prior and current periods reflect
--> the effect of change in accounting principle
4. If it is impracticable
--> apply at the beginning of the earliest period possible

Change in accounting estimate
1. "Prospective" application
--> Apply to current and future periods only
2. Do not apply retrospectively
3. Change in depreciation method is
--> a change in accounting estimate
4. If the effects of (A) and (B) are "inseparable"
--> Total amount is considered as (B)
(A) change in accounting principle
(B) change in accounting estimate

Change in reporting entity
1. Retrospective application
--> Apply to all prior periods presented
--> in the financial statements of new reporting entity

Correction of prior-period error
1. Retrospective "restatement"
--> Prior-period financial statements are restated
2. At the beginning of the first period presented
--> Cumulative effect will be reflected on the beginning balances
--> of assets, liabilities, and retained earnings
3. Balances of all prior and current periods reflect
--> the effect of error corrections
4. Materiality of errors is reviewed with reference to
--> the estimated "full fiscal year" income
5. Items material for (C), but not for (D) are
--> disclosed separately in the interim period
(C) interim period
(D) full fiscal year

Codification Topic 250
Accounting Changes and Error Corrections

Subtopics of Codification Topic 250

250-10 Overall

Accounting Terms of Codification Topic 250-10

   Accounting change
   Change in accounting estimate
   Change in accounting estimate effected by a change in accounting principle
   Change in accounting principle
   Change in the reporting entity
   Direct effects of a change in accounting principle
   Error in previously issued financial statements
   Indirect effects of a change in accounting principle
   Restatement
   Retrospective application