Asked by Celina Singh on Jun 10, 2024
Verified
When using the retrospective approach for a change in accounting principle,disclosure rules require that
A) prior years' income statements presented for comparative purposes be restated to reflect use of the new principle unless it is impractical to do so.
B) all prior years' income statements be restated to reflect use of the new principle,and include a pro forma net income figure of the previously reported income.
C) no prior years' income statements be restated,but a pro forma net income figure be provided to reflect use of the new principle for each year presented.
D) no prior years' income statements be restated,and no pro forma net income figures be provideD.
Retrospective Approach
The retrospective approach involves revising previously issued financial statements to reflect changes in accounting policy as if the new policy had always been in effect.
Change In Accounting Principle
An adjustment made to the accounting methods used by a company, requiring retrospective restatement of prior financial statements to reflect the new principle.
Disclosure Rules
These are regulations requiring companies to provide full, fair, and timely Disclosure of financial statements and other significant information.
- Understand how changes in accounting principles and estimates are reported and their impact on financial statements.
Verified Answer
Learning Objectives
- Understand how changes in accounting principles and estimates are reported and their impact on financial statements.
Related questions
A Cumulative Effect of a Change in an Accounting Principle ...
When a Company Changes from Any Inventory Method to LIFO,the ...
Royal,IncDiscovered That Equipment Purchased Three Years Ago for $300,000 Will ...
Several Items Related to Accounting Changes Appear Below ...
Why Did FASB Decide It Was Necessary to Require the ...