In short
Retrospective application of a change in accounting principle isn't required for periods where it is impracticable: the effects can't be determined after reasonable effort, would require assumptions about management's intent then, or need estimates that can't be objectively made.
Key takeaways
- The change is applied from the earliest period for which it is practicable.
- The reason retrospective application is impracticable is disclosed.
- Hindsight can't be used to make earlier estimates.
Where it's tested
FAR: Accounting Changes & Error Corrections — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
A company changes from the FIFO inventory method to the weighted-average method. How is this reported?