Acct 4120 Chapter 20 Spiceland 5th edition

Acct 4120 Chapter 20 Spiceland 5th edition - Acct4120...

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Acct 4120 Chapter 20 Accounting Changes and Error Corrections
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Types of Accounting Changes Chapter 20 page 2 Types of Accounting  Change Definition Change in Accounting  Principle Replacing one GAAP with  another GAAP Change in Accounting  Estimate Revision of an estimate  because of new information  or experience Change in Reporting  Entity Change from reporting as  one type of entity to another  type of entity
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Error Corrections Chapter 20 page 3 Transactions that are either recorded  incorrectly or are not recorded. Not considered accounting changes, but are  accounted for similarly.
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Two Reporting Approaches Retrospective Two Two Reporting  Reporting  Approaches Approaches Prospective  Chapter 20 page 4
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Approaches to Reporting  Accounting Changes and Error  Corrections Retrospective Most changes in accounting principle Change in reporting entity Corrections of errors Prospective Changes in estimate including changes in depreciation method Changes in accounting principle when retrospective application is impractical Changes in accounting principle when prospective application is mandated Chapter 20 page 5 Current Year Previous Years Later Years
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Revise prior year’s statements that are presented for comparative purposes to reflect the impact of the change. The balance in each account affected is revised to appear as if the newly adopted accounting method had been applied all along or that the error had never occurred. Adjust the beginning balance of retained earnings for the earliest period reported. Retrospective Approach
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Acct 4120 Chapter 20 Spiceland 5th edition - Acct4120...

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