Wiley GAAP 2013: Interpretation and Application of Generally Accepted Accounting Principles

CHAPTER 5

ACCOUNTING POLICIES, CHANGES, AND RESTATEMENTS

Perspective and Issues

Definitions of Terms

Concepts, Rules, and Examples

Accounting Policies

Initial Adoption Decisions

Accounting Changes

Summary of Accounting Changes and Error Corrections

Change in Accounting Principle

Preferability

Retrospective application

Impracticability exception

Changing or eliminating differences in fiscal year-end

Disclosure of Prospective Changes in GAAP

Disclosing the impact of newly established GAAP that has not yet become effective

Proposed GAAP

Reclassifications

Change in Accounting Estimate

Change in Accounting Estimate Affected by a Change in Accounting Principle

Change in Reporting Entity

Error Corrections

Evaluating Uncorrected Misstatements

Types of misstatements

Misstatements from prior years

Guidance for SEC registrants

Interim Reporting Considerations

Public companies

Going concern considerations

Disclosures about events subsequent to the date of the statement of financial position

PERSPECTIVE AND ISSUES

Under US GAAP, management is granted the flexibility of choosing between or among certain alternative methods of accounting for the same economic transactions, Examples of the availability of such choices are provided throughout this publication, in such diverse areas as alternative cost-flow assumptions used to account for inventory and cost of sales, different methods of depreciating long-lived assets, and varying methods of identifying operating segments. The professional literature ...