When theres a change in an accounting principle we are supposed to do a retrospective restatement of our financial statements. Its says we have to do this for all prior periods but does that mean if our company started in 1912, we have to change 100 years worth of financial statements? how many years do we go back/
Not sure the scope of the actual retrospectivity but assume that if there is a change in accouting priniciples used by a company, that they have to go back and change all financial statements presented. Besides a change in inventory method (from LIFO to FIFO) which is just changed going forward.
Can anyone confirm?
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Well changing from LIFO to any other method requires the retrospective, any other change is just prospective. I have no idea about time frame, but I’m willing to bet we don’t need to know that level of detail for the exam
I 2nd this