[Tux]

When it comes to error correction and change in entity, when do you restate and when do you give retrospective treatment?

error correction – restate or retrospective?

change in entity – restate or retrospective?

These confuse me!!

FAR - 86 - 2/27/14
AUD - 75 - 5/29/14
BEC - 80 - 8/31/14
REG - 89 - 2/27/15
Praise Jesus! I'm done!!

Study resources:
Becker
Wiley test bank

[oneFREAKINGpoint]

Error correction – restate

Change in entity – retro

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 comprability.

[Tina82]

Wiley question from accounting change section:

Presenting consolidated financial statements this year when last year individual financials were presented separately is done by:

Answer: Should be reported by RESTATING financial statements of all prios period presented.

However, based on wiley testlink and this post the answer should be “RETROSPECTIVE” not restate.

A restatement is the process of revising previously issued financial statements to correct an error. A retrospective application is the application of a different accounting principle to previously issued financial statements, as if that principle had always been used. Retrospective application is required for changes in accounting principle and changes in reporting entity.

What am I missing here?

R - 74;88
A - 84
B - 74;89
F - no study = 67; May 15 = 87 & done

[mangos]

According to my Becker book, changes in accounting entity are restated and retrospective.

You restate if comparative statements are presented.

FAR (5/07/13): 96

[Tina82]

Ok, to summarize all ( I just EDITED the entity section)

Change in Estimate = prospective = current and future periods

Change in Principle = retroactive = 1) adjust RE for years not presented 2) restate FS for periods presented

Change in Entity = retroactive = restate FS for periods presented only [CAN SOMEONE CONFIRM PLEASE?]

Error = restate = 1) adjust RE for the years not presented and 2) restate FS for the periods presented

So basically the treatment is the same, just the terminology is slightly different for changes = retroactive, for errors = restatement.

Thanks.

R - 74;88
A - 84
B - 74;89
F - no study = 67; May 15 = 87 & done

[Author]

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