Steps to Correct an Error: A journal is made to that are correct any account balances incorrect as a result of the error. Previous financial statements that were incorrect as a result of the error are to reflect the retrospectively restated correction (for all years reported again for comparative purposes). If retained earnings is one of the accounts incorrect as a result of the error, the correction is reported as a period “prior to the beginning balance in a statement of adjustment” shareholders’ equity (or statement of retained earnings if that’s presented instead), for the earliest year being reported in the comparative financial statements. A should describe the nature of the and disclosure note the impact of its correction on net income, income before extraordinary items, and earnings per share. T20-14
Steps to Correct an Error: A journal is made to correct any account balances that are incorrect as a result of the error. Previous financial statements that were incorrect as a result of the error are retrospectively restated to reflect the correction (for all years reported again for comparative purposes). If retained earnings is one of the accounts incorrect as a result of the error, the correction is reported as a “prior period adjustment” to the beginning balance in a statement of shareholders’ equity (or statement of retained earnings if that’s presented instead), for the earliest year being reported in the comparative financial statements. A disclosure note should describe the nature of the and the impact of its correction on net income, income before extraordinary items, and earnings per share. T20-14
Ch20%20Accounting%20Changes%20and%20Error%20Corrections.docx