Current Approach
Cumulative Effect of an Accounting Change
- This is the “usual” method to report changes in principle except for specified exceptions.
- “Current” approach.
- Calculate change up to the beginning of the period, net of the tax effect.
- Prior financial statements are NOT restated.
- Present net income before extraordinary items and net income as pro forma amounts as supplementary disclosure.
- Earnings per share based on those figures should be presented as well.
- See text pages 1226-1229.