Retroactive Approach
Retroactive Effect Type of Change. Recast prior period financial statements presented using the new principle for the following specified exceptions (to the “usual” or current approach to accounting principle changes):
- Switch from LIFO method of inventory valuation to any other method.
- Change in accounting for long-term construction contracts.
- Change to/from the “full cost” method
for extractive industries.
- When common stock is issued to obtain equity capital for the first time, to effect a business combination or register securities.
- Changes decreed by professional pronouncement.