[wjsniper824]

Until now, I believed that to LIFO and Change in depreciation estimates
are considered as change in estimates and get prospective treatment.

I was doing Becker FAR SIMS for Chapter 1 but in seems that
to LIFO is change in accounting principle, but just gets prospective treatment.

so, is to LIFO and change in depreciation estimates = change in accounting principle?

[SchruteBeet]

@wjsniper824 The general rule is that any change in accounting principle is treated retrospectively and any change in accounting estimate is treated prospectively. However, the only two exceptions to this rule are – a change in depreciation method and a change in any inventory method from XYZ to LIFO. This is because in case of the change in inventory method, it would be impracticable to go back in time and recalculate the LIFO layers. Therefore, these are two cases where a change in accounting principle is treated as a change in accounting estimate and therefore, applied prospectively. Hope this helps!

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