Retrospective application is considered impracticable if a company cannot determine the prior period effects using every reasonable effort to do so.

Question

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Retrospective application requires a company to determine the prior period effects of a change in accounting policy. However, if it is impracticable to determine these effects, the company may not be required to apply the change retrospectively. The company must make every reasonable effort to determine the prior period effects before determining that retrospective application is impracticable.

Retrospective Application Is Considered Impracticable If a Company Cannot Determine