There's three approaches available:

Retroactive approach - used mostly for error corrections, changes in reporting entities, and changes from LIFO to another inventory costing method.
Current approach (also known as cumulative approach) - used for most changes from one GAAP to another.
Prospective approach - used for changes in accounting estimates and changing to LIFO from another inventory costing method.

What's your favorite?

__________________
"It's just gonna be goin' on...like Donkey Kong...144,000 strong."
I still BRAKE for Kraken.

I usually just bludgeon the nearest Insurance worker to death with a frozen Turkey and let the changes work themselves out.

Personally, I like the retroactive method. It helps acheive the goals of effective accounting: consitency and comparability.

__________________
"It's just gonna be goin' on...like Donkey Kong...144,000 strong."
I still BRAKE for Kraken.

Consistency? Comparabillity?

Strange, I always thought the goal of accounting was to get your stock prices to go up...

Leo, accounting is anything but hysterical.
RCT, the goal of accounting and accoutants is to provide timely and accurate information used by decision makers. Accountants or anybody else at a business entity have no control over stock prices, those are established in secondary markets.

__________________
"It's just gonna be goin' on...like Donkey Kong...144,000 strong."
I still BRAKE for Kraken.

Hysterical and boring? Interesting.

__________________
"It's just gonna be goin' on...like Donkey Kong...144,000 strong."
I still BRAKE for Kraken.

I would've hated to see LeeLoo during those boring Sex Ed classes...

I'm a big fan of the Arthur Andersen approach, personally.

I'm just glad I don't have to worry about any of this stuff yet.

__________________
TV/Event Guide Editor

So...why am I the only one that has voted?

__________________
"It's just gonna be goin' on...like Donkey Kong...144,000 strong."
I still BRAKE for Kraken.

I have absolutely no idea what this poll is about, except that it somehow involves money......

This is in my parents' realm, not mine.

__________________
Aaron Cedoras: Thrillnetwork Story Editor
"Dead men tell no tales..."

This is absolutely hilarious. I think accounting is the most boring subject in the world. Yet we still have a thread on it.

I think we should start threads on quantum physics or brain surgery. Dam, I wish the spoofs threads were still open. My mind is cranking.

__________________
"Back to the 602; It's a 105 in the shade and I'm sippin' on a lemonade. Phoenix, Arizona puts the heat up on ya; I should warn ya the girls is fine as California." - Sir Mix Alot

Under the following situations you have to do Retro-Active:

1. A change from the LIFO inventory method to another method.
2. A change in the method of accounting for long term construction type contracts.
3. A change from or to the full cost method in extractive industries.
4. Issue of financials to obtain first time financing.
5. A pronouncement recommending retroactive adjustment.

If I had my choice I would prefer to do a Cumulative-Effect type of accounting change

__________________
Get off your ass and go ride some coasters!

Holy crap. I can't believe what I'm reading. Your right though, Cumulative-Effect kicks ass.

__________________
"Back to the 602; It's a 105 in the shade and I'm sippin' on a lemonade. Phoenix, Arizona puts the heat up on ya; I should warn ya the girls is fine as California." - Sir Mix Alot

Did you guys happen to catch the NOVA special on String Theory? Now that was some interesting stuff.

[url]http://www.pbs.org/wgbh/nova/elegant/[/url]

__________________
Get off your ass and go ride some coasters!

[QUOTE][i]Originally posted by Chain Dawg [/i]
[B]Under the following situations you have to do Retro-Active:

1. A change from the LIFO inventory method to another method.
2. A change in the method of accounting for long term construction type contracts.
3. A change from or to the full cost method in extractive industries.
4. Issue of financials to obtain first time financing.
5. A pronouncement recommending retroactive adjustment.

If I had my choice I would prefer to do a Cumulative-Effect type of accounting change
[/B][/QUOTE]

Very nice Chain Dawf, especially for an electrical engineer. To add to the list, the retroactive approach is also used for error corrections and changes in reporting entity.

__________________
"It's just gonna be goin' on...like Donkey Kong...144,000 strong."
I still BRAKE for Kraken.

Do not lighten this thread up leo. Next week's topic is the better method for preparing the statement of cash flows: Direct method or Indirect method.

__________________
"It's just gonna be goin' on...like Donkey Kong...144,000 strong."
I still BRAKE for Kraken.

Here is a nice little power point presentation that I used to educate myself on this accounting topic. Education! Who would of thought you could learn things by searching the internet?

[url]http://www3.interscience.wiley.com:8100/legacy/college/kieso/0471072036/ppt/ch17.ppt[/url]

Diesel -
Do you have any big clients?
Do you help them cook their books?

__________________
Get off your ass and go ride some coasters!

[QUOTE][i]Originally posted by Chain Dawg [/i]
[B]
Diesel -
Do you have any big clients?
Do you help them cook their books? [/B][/QUOTE]

No big clients for me, I work for a life insurance company and I don't have my CPA yet to do public accounting.

I would not be above helping someone be creative with their financial statements. There's many legal ways to do it. You can change your depreciation method, change the residual value of a depreciable asset, or change your method of inventory costing and none of those changes have to be disclosed except in little footnotes to the statements, which nobody reads anyway.

__________________
"It's just gonna be goin' on...like Donkey Kong...144,000 strong."
I still BRAKE for Kraken.