Accounting for Changes and Errors - Cengage

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CHAPTER Accounting for Changes and Errors OBJECTIVES After careful study of this chapter, you will be able to: 1. Identify the types of Accounting Changes . 2. Explain the methods of disclosing an Accounting change . 3. Account for a change in Accounting principle using the retrospective adjustment method. 4. Account for a change in estimate. 5. Explain the conceptual issues regarding a change in Accounting principle and a change in estimate. 6. Identify a change in a reporting entity. 7. Account for a correction of an error. 8. Summarize the methods for making Accounting Changes and correcting Errors . 23-1 SYNOPSIS Types of Accounting Changes 1. GAAP establishes the generally accepted Accounting principles for the following Changes : (a) change in Accounting Principle - A change from one generally accepted Accounting principle to another generally accepted Accounting principle that is more preferable.

A change in accounting principle made in an interim period is reported by retrospective application of the new accounting principle as of the first interim period, regardless of the interim period in which the change occurs. 4. The initial adoption by a company of an

  Change, Made