Change in Accounting Principle

This video shows how to accounting for a change in accounting principle. A change in accounting principle occurs when a company switches from one GAAP method to a different GAAP method. When this happens, the company is required to:

(1) describe the nature of the change, the reason for the change, and the periods affected by the change

(2) recast the financial statements for any periods presented, as if the new principle had been followed all along

(3) book any cumulative effect of the change (the effect prior to the periods presented) as a cumulative adjustment to the beginning balance of Retained Earnings for the earliest period presented in the financials

Thus, changes in accounting principle require retrospective application (unless it is impracticable to do so).—
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[juankajv]

First, thank you for the videos. They have helped me and others significantly. Also, When would the modified retrospective or the prospective approach be used. When it is impracticable to do the retrospective approach? Maybe that’s what you are planning on covering in your next video. Once again, thank you.

[stephenmark]

So for the second adjustment (2018), it would be?
Inventory 30, 000
Deferred tax liability 6, 000
Retained earnings 24, 000


But this entry would actually be made in 2019?

[Whatstrendingworldwide_]

your lessons are always helpful s/o to u

[ujjwalr]

I have one question so here we do make changes in inventory in B/S also as to match our B/S

[barah]

Change from unaccepted principle to accepted principle? yas or no

[waleeswaleed]

Hellop sir i have two question can you help me
1) how corporate governance ( board independence) effect balanced scorecard implementation
2) how corporate governance ( internal control independence) effect balanced scorecard implementation.
Please i need your help.... thank you