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2009 GAAP GUIDE LEVEL A
CHAPTER 1
ACCOUNTING CHANGES
CONTENTS
Overview　　　　　　　　　　　　　　　　　　　　　　　　　　　1．01
Background　　　　　　　　　　　　　　　　　　　　　　　　　　1．02
Changes in Accounting Principle　　　　　　　　　　　　　　　　1．05
Illustration of the Application　　　　　　　　　　　　　　1．07
Accountiting Principle
Disclosure　　　　　　　　　　　　　　　　　　　　　　　　　1．11
Changes in Accounting Estimate　　　　　　　　　　　　　　　　1．11
Illustration of Current and Propective Method　　　　　　　1．12
Disclosure　　　　　　　　　　　　　　　　　　　　　　　　　1．13
Changes in Reporting Entity　　　　　　　　　　　　　　　　　　1．13
Disclosure　　　　　　　　　　　　　　　　　　　　　　　　　1．13
Corrections of Errors in Previously Issued Financial
Statements　　　　　　　　　　　　　　　　　　　　　　　　　1．14
Illustration of Corrtction
Finacial Statelnents　　　　　　　　　　　　　　　　　　　　1．14
Disclosure　　　　　　　　　　　　　　　　　　　　　　　　　　1．17
of Error in Proviously lssued
Related Chapters in 2009 GAAP Guide Level A　　　　　　　　　　1．17
Related Chapters in 2009 GAAP Guide Levels B，C，and D　　　　1．17
Related Chal ters in 2009 International Accounting／
Financial Reporting Standard S Guide　　　　　　　　　　　1．18

OVERVIEW

Accounting changes are broadly classified as (a ) changes in an accounting principle，(b)changes in an accounting estimate, and (c)changes in the reporting entity(FAS一154,par．2a)．CorrectiotIS oferrors in previously／issued financial statements are not accounting；changes but are covered 117 the same accounting literature because of their similar-ity(FAS一154，par．1)．
Two different accounting methods are used within GAAP to account for accounting changes and corrections of errors：(1)currentand prospective method，and(2)retroactive restatement method．These methods are not alternatives--the authoritative literature is specific concerning which method is to be used for each type ofaccounting change or correction of error．
GAAP for accounting changes prepared in conformity with GAAP authorita tive literature：
FAS一111 Rescission of FASB Statement No．32 and Technical Corrections
FAS一154 Accounting Changes and Error Corrections
FIN一1 Accounting Changes Related to the Cost of Inventory

BACKGROUND
Changes in accounting principle,estimate,and entity are described in the authoritative 1iterature as follows：
· Change IN accounting principle--Results from the adoption of a generally accepted accounting principle different from the one used previously for financial reporting purposes．The term principle includes not only principles and practices，but also methods of applying them(FAS一154，par．2c)．
· Change in accounting estimate--Necessary consequence of periodic presentations of financial statements and the many estimates and assumptions that und erlie those statements．A change in estimate results in a change in the carrying value of an existing asset or liability or a change in the future accounting treatment of an existing asset or liability(FAS一1 54，par．2d)．
· Change in accountill tltit A special type of change in accounting principle that results when the reporting entity is different from that of previous periods．This type of change iS characterized by(a)presenting consolidated or combined financial statements in place of individual company

2009 GAAP GUIDE LEVEL B, C AND D
CHAPTER 1
ACCOUNTING CHANGES
CoNTENTS
CoNTENTS
Overview 1．01
Level C
EITF Issues 1．03
84—9 Deposit Float of Banks 1．03
06—9 Reporting a Change in(or the Elimination of)a
Previously Existing Difference between the
Fiscal Year—End of a Parent Company and That
of a Consolidated Entity or between the
Reporting Period of an Investor and That of an
Equity Method Investee 1．04
EITF／FASB／SEC Staff Announcements 1．05
Topic D-1
Implications and Implementation of an
EITF Consensus 1．05
Related Chapter in 2009 GAAP Guide Levels B,C,and D 1．06
Related Chapters in 2009 GAAP Guide Level A 1．06
Related Chapters in 2009 International Accounting／Financial
Reporting Standards Guide 1．06

0VERVlEW
Accounting changes are broadly classified as(a)changes in an accounting principle，(b)changes in an accounting estimate，and (C)changes in the reporting entity．Corrections errors in prevlously issued financial statements are not accounting changes but are covered in the same accountin；fiterature because 0，tl~eir similarity·
Three different accounting methods are used to account tor accounting changes and corrections of errors：(1)current and prospective，(2)retrospective application，and(3)restatement．These ethods are not alternatives--the authoritative literature lS specific concerning which method should be used for each type of accounting change or correction of error．

GAAP for accounting changes apply to financial statements prepared in conformity with GAAP and are found in the following pronouncements included in the highest level of the SAS一69 GAAP
hierarchy：
FAS一73Reporting a Change in Accounting for Railroad Track Structures
FAS一111Rescission of FASB Statement No．32 and Technical C orrections
FAS一154Accounting Changes and Error Corrections
FIN一1Accounting Changes Related to the Cost of Inventory
FIN一20Reporting Accounting Changes under AICPA Statements of Position

Coverage of the pronouncements is available in the 2009 GAAP Guide Level A，Chapter 1，Accounting Changes
The EITF consensus positions discussed in this chapter are additional sources of GAAP concerning accounting changes．

LEVEL C
EITF Issues
Issue 84．9 Deposit Float of Banks
OVERVIEW
Until the end of 1983,it had been common practice for banks to record customers deposit as cash and liabilities to customers,and to pay interest from the date of deposit.
However, the December 31,1983,financial statements of at least two banks showed that they had netted and liabities related to some of theri customersdeposits. One bank justified not recognizing assets or liabilities for deposit float(amounts，deposited in the form of checks and similar items drawn on other banks or institutions that a bank has accepted but has not yet collected) by characterizing itself as an agent for its customers until theri checks had been collected.
ACCOUNTlNG ISSUES
1．Should banks be permitted to change their accounting by delaying recognition of customer deposits of checks as assets and liabilities until after having collected funds from the bank on which the checks were drawn?
2．Would a change in method of accounting for customer deposits be considered an accounting change under APB一20?
EITF CONSENSUS
1．The EITF did not reach a consensus on this xssue，because AcSEC had issued a Notice to Practitioners in the September24，1 984，issue of The CPA Letter(reprinted as Appendix G of Practice Bulletin No．1)．AcSEC believed that banks should not change their accounting and continue recording deposit float as assets and liabilities．
2．The EITF reached a consensus that a change in treatment of deposit float is not merely a matter of classification but would constitute a change in accounting principle，because it relates to asset and liability recognition issues．However，the Task Force opposed such a change，stating that it would be extremely difficult to justify it as a preferable accounting meth— od as a result of AcSEC’S issuance of the Notice to Practitioners and established practice．