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II. Accounting Changes (Accounting Principle Change (Ex: LIFO to FIFO,…
II. Accounting Changes
Accounting Principle Change
Ex: LIFO to FIFO
Adjust RE
Entity Change
Ex: Standalone to Consolidated Statements
Error Change
Beginning balances of earliest period
Ex: Non-GAAP to GAAP
Estimate Change
Fix going forward
SLD to DDB Depreciation
Retrospective
All but estimates
Entity
Errors
Accounting Principles
General Rule:
Material effect if not changed
Can identify it in prior period
Previously can't estimate, now we can
Adjust Prior Periods
Footnotes required for Entity and Errors
Adjust RE if Accounting Principle
Require Footnotes
Estimates
Entity
Errors
Three E's
Prosepctive
Adjust going-forward
Only Estimates allow prospective change