08:3522-1Bob Anderson- UCSBAccounting Changes and Error AnalysisChapter 2222-2Bob Anderson- UCSBMATERIALITY!!!!Everything ever must be materialto matter. Consequently, remember that for this whole class, we assume the items we discuss are material to the Company.22-3Bob Anderson- UCSBAccounting Changes - APBO No. 20Classifications:a.Change in Accounting Principle ---GAAP to GAAP change»NEW literature: FASB Statement No.154.b. Change in Accounting Estimate ---Example = useful lives of fixed assetsc.Change in Reporting Entity ---Example = changing specific subsidiaries in consolidated financial statements.22-4Bob Anderson- UCSBChange in PrincipleChange from one GAAP to another GAAPA change is NOTconsidered to result when a new principle is adopt in recognition of events that have occurred for the first time or that were werepreviously immaterial.Change from non GAAP to GAAP is not an accounting changes but rather considered aCorrection of an ErrorNOTE: When it is difficult to determine if it is a change in estimate or a change in principle (such as change in depreciation method), GAAP requires that it be treated as a change in estimate (Current & Forward).
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