When making a retrospective adjustment, all of the following steps are included except
A) computing the cumulative effect of the new accounting principle as of the beginning of the first period presented.
B) adjusting the current period net income for the cumulative effect of the change.
C) adjusting the carrying value of impacted assets and liabilities.
D) disclose the nature and reason for the change in accounting principle, including the new principle is preferable.

Question

Quizplus · Accepted Answer

Adjusting the current period net income for the cumulative effect of the change is not part of making a retrospective adjustment. Instead, retrospective adjustments involve computing the cumulative effect as of the beginning of the first period presented, adjusting the carrying values of impacted assets and liabilities, and disclosing the nature and reason for the change, including why the new principle is preferable. The cumulative effect is reflected in the opening balances of affected accounts, not as an adjustment to the current period's net income.

When Making a Retrospective Adjustment, All of the Following Steps