Term
| Change in Accounting Principle |
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Definition
| From one generally accepted method to another |
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Term
| Changes in accounting estimate |
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Definition
| change that results from new info or additional experience |
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Term
| Change in reporting entity |
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Definition
| changing how segments or subsidiaries are defined for financing reporting purposes |
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Term
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Definition
| Not technically an "accounting change." Must refer to it as a correction of an error in reports to investors. |
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Term
| Currently (cumulative effect) |
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Definition
One approach to an accounting change.
Accumulate past effects and report in current year.
Can be used for changes/errors that have an immaterial effect on financial statements. |
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Term
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Definition
A approach for reporting changes.
Re-report prior year's statements as if the new principle had always been used.
Used for 1.) changes in principle 2.) changes in entity 3.) corrections for errors |
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Term
| Prospectively (in the future) |
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Definition
One approach for reporting changes.
No past adjustments; simply change the accounting going forward.
Used for changes in estimates. |
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Term
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Definition
1. A change from an accounting principle that is not generally accepted to an accounting principle that is acceptable.
2. Mathematical mistake.
3. Changes in estimates that occur because a company did not prepare the estimates in good faith.
4. Failure to accrue or defer certain expenses or revenues.
5. Misuse of facts. |
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Term
| Accounting Estimate Changes |
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Definition
1. Uncollectible receivables.
2. Useful lives and salvage values of assets.
3. Liabilities for warranty costs and income taxes.
4. Recoverable mineral reserves.
5. Change in depreciation methods--represents a change in estimate AND principle. -- USE PROSPECTIVE APPROACH. |
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