Answer to Question #171926 in Accounting for Milan

Question

Can you explain to me what is the difference between restating the prior periods and retrospective application?

Answer 1

Solution:

Restating the prior periods is the process of revising previously issued statements to correct a mistake or error in accounting. On the other hand, retrospective application is the application of a new accounting principle to previously issued financial statements as if that principle had always been applied. It is applied when the financial statements for multiple periods are being presented and it is required for changes in accounting principle and changes in reporting entity.