Change in Accounting Principle
- Define a change in accounting principle.
- How are most changes in accounting principle accounted for and reported?
- What is the "Cumulative effect of a change in accounting principle?"
- How was the cumulative effect reported in the financial statements under APB Opinion No. 20? And how did was the reporting changed in FASB Statement No. 154?
- What argument(s) can be made for retroactively reporting changes in accounting principles?
- Why did the APB, in Opinion No. 20, rule out the retroactive restatement approach for most changes in accounting principles?
- Explain in detail how a change in accounting principle would be reported in the financial statements.
- If a change in principle occurs in year 3, what method of accounting (old or new) should be used in preparing year 3 financial statements?
- What were "pro-forma presentations?" Where were they reported? Are pro-forma presentations for changes in accounting necessary under FASB Statement No. 154?
- What disclosures are necessary when a change in accounting principle occurs?
- What changes in accounting principles should be reported retroactively?
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