ASC 250 Accounting Changes and Error Corrections

An accounting change can be a change in an accounting principle, an accounting estimate, or the reporting entity. This Subtopic establishes, unless impracticable, retrospective application as the required method for reporting a change in accounting principle in the absence of explicit transition requirements specific to a newly adopted accounting principle. This Subtopic provides guidance for determining whether retrospective application of a change in accounting principle is impracticable and for reporting a change when retrospective application is impracticable.

The correction of an error in previously issued financial statements is not an accounting change. However, the reporting of an error correction involves adjustments to previously issued financial statements similar to those generally applicable to reporting an accounting change retrospectively. Therefore, the reporting of a correction of an error by restating previously issued financial statements is also addressed by this Subtopic.

This Subtopic also:

1. Specifies the method of treating error corrections in comparative statements for two or more periods
2. Specifies the disclosures required when previously issued statements of income are restated
3. Recommends methods of presentation of historical, statistical-type financial summaries that are affected by error corrections.