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Replace Checkmark into the Accounting Contract

Replace Checkmark into the Accounting Contract

Aug 6th, 2022

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How to Replace Checkmark into the Accounting Contract

4.8 out of 5

31 votes

In this video, the presenter explains how to account for a change in accounting principle, specifically when a company switches from one Generally Accepted Accounting Principle (GAAP) method to another, such as moving from the percentage of completion method to the completed contract method for construction contracts. This change is accounted for retrospectively, meaning prior financial statements must be revised. An adjustment to retained earnings is also necessary unless it is impracticable to do so. The video hints at further instructions in a subsequent video for scenarios where retrospective application is not feasible. Additionally, the presenter highlights the importance of disclosures regarding the nature of the change, such as switching from the weighted average cost method of inventory to FIFO, along with the reasons for the change.

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