SFAS 154 - Accounting Changes and Error Corrections Assignment

SFAS 154 - bill Changes and Error Corrections - Assignment ExampleAt times, it also happens that a change in the report policy or principle affects the consolidated pecuniary statements of the group as well. So, SFAS 154 aims to highlight all of the preceding(prenominal) discussed issues in details and provide appropriate guidance as how to incorporate the effects of all those changes in the financial statements of the reporting entity. This article is structured in such a manner that first fragment describes the overview of SFAS 154 which includes the objective of its issuance as well as the scope of this received. Next section focuses on recognition, standard and disclosure requirements of SAFS 154. Third section highlights the comparison of SFAS 154 of FASB with IAS 8 of IASB i.e. a comparison between US generally accepted account statement system principles and IFRS in respect of these two standards. An illustrated example is also provided after the comparison of the sta ndards which is then followed by a conclusion which summarizes the whole article. Overview of SFAS 154 Objective Mainly the objective of FASB to issue this standard is to bugger off more convergence with IASB towards the preparation, development and furnishing the financial statement as a high quality single set across the world (Deloitte, 2008). As IASB has issued IAS 8 on similar footings, therefore it is the intension of two accounting standard boards to bring more harmonized financial statements in most of the areas of accounting. ... The section account Changes is further divided into three areas which are Changes in Accounting Principle, Changes in Accounting Estimates and lastly, Changes in the Reporting Entity (Financial Accounting Standard Board, 2009). Scope The scope of this standard covers three areas which are listed below (Financial Accounting Standard Board, 2009) 1. SFAS 154 is relevant for both profit fashioning business organizations as well as not-for-profi t organizations. In this standard both these kinds of organizations are referred to as entities. 2. Another application of SFAS 154 can be possible in case of summarized financial information which are primarily based upon the financial statements such that accounting changes are reflected in the accounting period in which those changes have arisen. 3. SFAS 154 also encompasses the other forms of financial statements which are prepared for some additional purposes. Measurement, Recognition and Disclosure Changes in Accounting Principles SFAS 154 provides specific guidelines to incorporate a change in the accounting principle. A change in the accounting principle is the change that has been made by FASB by making amendment, addition or deletion in the existing accounting standards issued by FASB (Financial Accounting Standard Board, 2009). FASB requires the entities to bring the effects of the changes in accounting principle retrospectively such that all of the previously issued fin ancial statements fill to be modified as a result of change in accounting principles (Deloitte, 2008). SFAS 154 also guides the entities in the situations where it is not practicable for the entities to bring the effects of the