Diversified Systems, Inc., reports consolidated financial statements this year in place of statements of individual companies reported in previous years. This results in:
A) An accounting change that should be reported prospectively.
B) An accounting change that should be reported by restating the financial statements of all prior periods presented.
C) A correction of an error.
D) Neither an accounting change nor a correction of an error.

Question

Quizplus · Accepted Answer

This is a change in reporting entity to be accounted for retrospectively. That is, financial statements of prior periods are restated to report the financial information for the new reporting entity in all periods.