BUS 321 Lecture Notes - Lecture 11: Financial Statement, Infor, Capital Structure

• School: Simon Fraser University
• Department: Business Administration
• Course: BUS 321
• Professor: Jaqueline Faubert

Document Summary

Change in accounting policy: principles, bases, rules, practices (from gaap to other gaap, Fifo to wa/lifo, completed contract to % of completion) (comparable statement) Not new policy recognizes events occurred 1st time/ previously immaterial/ clearly different in substance from previous. Not clear = estimate/correction of error (complete to % completion but new project economically different + longer term) Political cost: large firm = large profit = political target. Capital structure: debt/equity structure will impact accounting policies due to debt covenants. Smooth earnings: gradual increase/decrease income to shift attention. Lack of expertise estimate, not good faith = error, careful estimate = change in estimate. Prior year error = restate prior statements if comparable statement. Prior period error: no entry as accounts closed to re and current year correctly state, restate prior error year if comparable statement. Counterbalancing ( overstate purchase, understate ei, overstate purchase and ei): self-correct/offset over 2 periods.