Material prior period errors must be corrected retrospectively, unless it is impracticable to do so.

Question

Quizplus · Accepted Answer

Material prior period errors, which are errors in financial statements from previous years that have a material effect on current period financial statements, must be corrected retrospectively. This means adjusting the opening balance of retained earnings or other appropriate accounts to reflect the correction in the beginning balance of the earliest period presented, and restating all affected financial statements. However, if it is impracticable to determine the effect of the error on all prior periods, a retrospective correction may be omitted for those periods.

Material Prior Period Errors Must Be Corrected Retrospectively, Unless It