Accounting Changes Flashcards
1
Q
How are changes in accounting principle applied?
A
"Retrospective Application: Prior Periods adjusted Retained Earnings adjusted Completed Contract to % Completion Ex: LIFO to FIFO"
2
Q
“Would a change from Completed Contract to Percentage of Completion be a change in accounting principle- or a change of estimate?
How would it be applied?”
A
“A change of principle.
Applied retrospectively.”
3
Q
“Would a change from LIFO to FIFO be a change in accounting principle or a change of estimate?
How would this change be applied?”
A
“A change in accounting principle.
Applied retrospectively.”
4
Q
How is a change in accounting estimate applied?
A
“A change in accounting estimate is applied prospectively (going forward).
No backwards adjustment is made.”
