You mean the difference between Retrospective and Retroactive
Retrospective – I look at it as you have to Adjust your Opening RE from the periods that you are going to show in your Financials – Cumulative Effect adjustments – For Comparability in Your Financial statements.
Retroactive – You need to reinstate your prior period FS because they had an Error – So its like going back and re-doing them to how they should have been done in the first place.
The term “retroactive” is used when correcting and error, while “retrospective” is used for change in acctg principle or change in reporting entity.
Think about it this way…if you have an error it means you f'd up and you have to “do it over correctly” aka restate
Change in entity is something like consolidating or combining for the first time. Remember that you have to go back and show what your comparative financials would have looked like had you consolidated in previously presented years (not just the year you started consolidating) for comparability.
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