a change in accounting principle from one that is not generally accepted to one

ID: 2599767 • Letter: A

Question

a change in accounting principle from one that is not generally accepted to one that is generally accepted should be treated as:

a. an error and corrected by prior period adjustment

b. a change in accounting principle and the cumulateie effect included in net income

c. a change in accounting principle and prior period financial statements are restarted.

d.a change in accounting principle and adjustments nade prosperctively

A change from LIFO to FIFO should be accounted for:

a. by footnote disclosure only

b. Propsectively only

c. currently and prospectively

d. retrospectively

Part 1 - answer (a)

Change in accounting principle which are not generally accepted to generally accepted is error/correction in financial statements.

such error in preparation of financial statements are corrected by prior period adjustement.

Part 2 - answer (d)

Change in method of valuation of inventory from LIFO to FIFO is change in accounting principle or accounting change.

Such change is adjusted in financial statements on restrospective basis and in any other manner.

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