# ASC 250-10-45: Accounting Changes and Error Corrections — Overall — 45 Other Presentation Matters Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/250/10/#45-other-presentation-matters) Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-09T23:17:07.240Z to 2026-09-09T23:17:07.240Z Record version: sha256:f9314da8c6c9015557e5392cefd67f6e76b06079053dd3fff75d0f64efc8a8f7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 250-10-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/250/10/#45-other-presentation-matters) SEC content: no #### Accounting Changes ##### [250-10-45-1](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:17:07.240Z to 2026-09-09T23:17:07.240Z Record version: sha256:fcbf4bc1e620ff8a07042ff46a6c4d496238fc4f586a747cdd7a19f625bddc77 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A presumption exists that an accounting principle once adopted shall not be changed in accounting for events and transactions of a similar type. Consistent use of the same accounting principle from one accounting period to another enhances the utility of financial statements for users by facilitating analysis and understanding of comparative accounting data. Neither of the following is considered to be a [change in accounting principle](https://asc.understandingaccounting.org/glossary/c/#change-in-accounting-principle "A change from one generally accepted accounting principle to another generally accepted accounting principle when there are two or more generally accepted accounting principles that apply or when the accounting principle formerly used is no longer generally accepted. A change in the method of applying an accounting principle also is considered a change in accounting principle."): 1. a Initial adoption of an accounting principle in recognition of events or transactions occurring for the first time or that previously were immaterial in their effect 2. b Adoption or modification of an accounting principle necessitated by transactions or events that are clearly different in substance from those previously occurring. ##### [250-10-45-2](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-2) Pending content: no Source downloaded (UTC): 2026-09-09T23:17:07.240Z to 2026-09-09T23:17:07.240Z Record version: sha256:b6debf00c200291217f3f9484533cb0d39417c013d81d0b1cfa035ec62d2ad10 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A reporting entity shall change an accounting principle only if either of the following apply: 1. a The change is required by a newly issued Codification update. 2. b The entity can justify the use of an allowable alternative accounting principle on the basis that it is preferable. ##### [250-10-45-3](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-3) Pending content: no Source downloaded (UTC): 2026-09-09T23:17:07.240Z to 2026-09-09T23:17:07.240Z Record version: sha256:146efa5a4d58f01d72cc38a48ae7f04b925bc305ca7007d067e7e064ed75d211 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. It is expected that Codification updates normally will provide specific transition requirements. However, in the unusual instance that there are no transition requirements specific to a particular Codification update, a change in accounting principle effected to adopt the requirements of that Codification update shall be reported in accordance with paragraphs [250-10-45-5 through 45-8](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-5) . Early adoption of a Codification update, when permitted, shall be effected in a manner consistent with the transition requirements of that update. ##### [250-10-45-4](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-4) Pending content: no Source downloaded (UTC): 2026-09-09T23:17:07.240Z to 2026-09-09T23:17:07.240Z Record version: sha256:7b00541fc9d9fde844cef6927e7407c74e8afdbea056b717450fdef9ff9097b1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This requirement is not limited to newly issued Codification updates. For example, if existing Codification guidance permits a choice between two or more alternative accounting principles, and provides requirements for changing from one to another, those requirements shall be followed. ##### [250-10-45-5](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-5) Pending content: no Source downloaded (UTC): 2026-09-09T23:17:07.240Z to 2026-09-09T23:17:07.240Z Record version: sha256:017bdce5de415ac7791fba7cccd34b1fa61b688f16c6089906d649e74f15ca24 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall report a change in accounting principle through [retrospective application](https://asc.understandingaccounting.org/glossary/r/#retrospective-application "The application of a different accounting principle to one or more previously issued financial statements, or to the statement of financial position at the beginning of the current period, as if that principle had always been used, or a change to financial statements of prior accounting periods to present the financial statements of a new reporting entity as if it had existed in those prior years.") of the new accounting principle to all prior periods, unless it is impracticable to do so. Retrospective application requires all of the following: 1. a The cumulative effect of the change to the new accounting principle on periods prior to those presented shall be reflected in the carrying amounts of assets and liabilities as of the beginning of the first period presented. 2. b An offsetting adjustment, if any, shall be made to the opening balance of retained earnings (or other appropriate components of equity or net assets in the statement of financial position) for that period. 3. c Financial statements for each individual prior period presented shall be adjusted to reflect the period-specific effects of applying the new accounting principle. ##### [250-10-45-6](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-6) Pending content: no Source downloaded (UTC): 2026-09-09T23:17:07.240Z to 2026-09-09T23:17:07.240Z Record version: sha256:cc293d00a0348e4ec11950c5f06a21e566eea9af47660b64a8383fdacfff31b4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the cumulative effect of applying a change in accounting principle to all prior periods can be determined, but it is impracticable to determine the period-specific effects of that change on all prior periods presented, the cumulative effect of the change to the new accounting principle shall be applied to the carrying amounts of assets and liabilities as of the beginning of the earliest period to which the new accounting principle can be applied. An offsetting adjustment, if any, shall be made to the opening balance of retained earnings (or other appropriate components of equity or net assets in the statement of financial position) for that period. ##### [250-10-45-7](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-7) Pending content: no Source downloaded (UTC): 2026-09-09T23:17:07.240Z to 2026-09-09T23:17:07.240Z Record version: sha256:5b49b4e7cc233a8438d3be8ee3e10d634d0478f172a38c36840c79b256517ea8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If it is impracticable to determine the cumulative effect of applying a change in accounting principle to any prior period, the new accounting principle shall be applied as if the change was made prospectively as of the earliest date practicable. See Example 1 (paragraphs [250-10-55-3 through 55-11](https://asc.understandingaccounting.org/asc/250/10/#250-10-55-3) ) for an illustration of a change from the first-in, first-out (FIFO) method of inventory valuation to the last-in, first-out (LIFO) method. That Example does not imply that such a change would be considered preferable as required by paragraph [250-10-45-12](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-12). ##### [250-10-45-8](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-8) Pending content: no Source downloaded (UTC): 2026-09-09T23:17:07.240Z to 2026-09-09T23:17:07.240Z Record version: sha256:6ad25bf6cb4fdc567226f95add40ebec1a419434653b523f2563520c01c446f0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Retrospective application shall include only the [direct effects of a change in accounting principle](https://asc.understandingaccounting.org/glossary/d/#direct-effects-of-a-change-in-accounting-principle "Those recognized changes in assets or liabilities necessary to effect a change in accounting principle. An example of a direct effect is an adjustment to an inventory balance to effect a change in inventory valuation method. Related changes, such as an effect on deferred income tax assets or liabilities or an impairment adjustment resulting from applying the subsequent measurement guidance in Subtopic 330-10to the adjusted inventory balance, also are examples of direct effects of a change in accounting principle."), including any related income tax effects. Indirect effects that would have been recognized if the newly adopted accounting principle had been followed in prior periods shall not be included in the retrospective application. If indirect effects are actually incurred and recognized, they shall be reported in the period in which the [accounting change](https://asc.understandingaccounting.org/glossary/a/#accounting-change "A change in an accounting principle, an accounting estimate, or the reporting entity. The correction of an error in previously issued financial statements is not an accounting change.") is made. ##### [250-10-45-9](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-9) Pending content: no Source downloaded (UTC): 2026-09-09T23:17:07.240Z to 2026-09-09T23:17:07.240Z Record version: sha256:6eda8c9fd2abb190bd8da8aa5f299f38d3c800793bd1748206ab169bd0e34af0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. It shall be deemed impracticable to apply the effects of a change in accounting principle retrospectively only if any of the following conditions exist: 1. a After making every reasonable effort to do so, the entity is unable to apply the requirement. 2. b Retrospective application requires assumptions about management's intent in a prior period that cannot be independently substantiated. 3. c Retrospective application requires significant estimates of amounts, and it is impossible to distinguish objectively information about those estimates that both: 1. 1 Provides evidence of circumstances that existed on the date(s) at which those amounts would be recognized, measured, or disclosed under retrospective application 2. 2 Would have been available when the financial statements for that prior period were issued. ##### [250-10-45-10](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-10) Pending content: no Source downloaded (UTC): 2026-09-09T23:17:07.240Z to 2026-09-09T23:17:07.240Z Record version: sha256:9843cd8820503e457a7cb7d99b2d2808091ad115b99d5f39fd29b78d6448da83 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic requires a determination of whether information currently available to develop significant estimates would have been available when the affected transactions or events would have been recognized in the financial statements. However, it is not necessary to maintain documentation from the time that an affected transaction or event would have been recognized to determine whether information to develop the estimates would have been available at that time. ##### [250-10-45-11](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-11) Pending content: no Source downloaded (UTC): 2026-09-09T23:17:07.240Z to 2026-09-09T23:17:07.240Z Record version: sha256:a9941b4d96f0e11a2255ccfaadcf2ae772eadae55c49454a0abf05a69237b9a8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In the preparation of financial statements, once an accounting principle is adopted, it shall be used consistently in accounting for similar events and transactions. ##### [250-10-45-12](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-12) Pending content: no Source downloaded (UTC): 2026-09-09T23:17:07.240Z to 2026-09-09T23:17:07.240Z Record version: sha256:862827cc3c0ca50de385777012e7e707728c77c559c66705425dc892b1a98ee4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity may change an accounting principle only if it justifies the use of an allowable alternative accounting principle on the basis that it is preferable. However, a method of accounting that was previously adopted for a type of transaction or event that is being terminated or that was a single, nonrecurring event in the past shall not be changed. For example, the method of accounting shall not be changed for a tax or tax credit that is being discontinued. Additionally, the method of transition elected at the time of adoption of a Codification update shall not be subsequently changed. However, a change in the estimated period to be benefited by an asset, if justified by the facts, shall be recognized as a [change in accounting estimate](https://asc.understandingaccounting.org/glossary/c/#change-in-accounting-estimate "A change that has the effect of adjusting the carrying amount of an existing asset or liability or altering the subsequent accounting for existing or future assets or liabilities. A change in accounting estimate is a necessary consequence of the assessment, in conjunction with the periodic presentation of financial statements, of the present status and expected future benefits and obligations associated with assets and liabilities. Changes in accounting estimates result from new information. Examples of items for which estimates are necessary are uncollectible receivables, inventory obsolescence, service lives and salvage values of depreciable assets, and warranty obligations."). ##### [250-10-45-13](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-13) Pending content: no Source downloaded (UTC): 2026-09-09T23:17:07.240Z to 2026-09-09T23:17:07.240Z Record version: sha256:2a06e2295b94787ed765a2492d21e9cd7639983efccc2cbbb270440fea4747d9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The issuance of a Codification update that requires use of a new accounting principle, interprets an existing principle, expresses a preference for an accounting principle, or rejects a specific principle may require an entity to change an accounting principle. The issuance of such an update constitutes sufficient support for making such a change. ##### [250-10-45-14](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-14) Pending content: no Source downloaded (UTC): 2026-09-09T23:17:07.240Z to 2026-09-09T23:17:07.240Z Record version: sha256:24d6d89cddbfc7092676387023007dadda5d12ddcf97798397efdcf989917fd0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A change in accounting principle made in an interim period shall be reported by retrospective application in accordance with paragraphs [250-10-45-5 through 45-8](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-5) . However, the impracticability exception in paragraph [250-10-45-9](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-9) may not be applied to prechange interim periods of the fiscal year in which the change is made. When retrospective application to prechange interim periods is impracticable, the desired change may only be made as of the beginning of a subsequent fiscal year. ##### [250-10-45-15](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-15) Pending content: yes Source downloaded (UTC): 2026-09-09T23:17:07.240Z to 2026-09-09T23:17:07.240Z Record version: sha256:13f590c1a2c23995e9ba4395de26fc8dd9b437d320343f97eb004b80102d9ec6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a public entity that regularly reports interim information makes an accounting change during the fourth quarter of its fiscal year and does not report the data specified by paragraph [270-10-50-1](https://asc.understandingaccounting.org/asc/270/10/#270-10-50-1) in a separate fourth-quarter report or in its annual report, that entity shall include disclosure of the effects of the accounting change on interim-period results, as required by paragraph [250-10-50-1](https://asc.understandingaccounting.org/asc/250/10/#250-10-50-1), in a note to the annual financial statements for the fiscal year in which the change is made. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [270-10-65-1](https://asc.understandingaccounting.org/asc/270/10/#270-10-65-1)If a public entity that regularly reports interim information makes an accounting change during the fourth quarter of its fiscal year and does not report the change in a separate fourth-quarter report or in its annual report, that entity shall include disclosure of the effects of the accounting change on interim-period results, as required by paragraph [250-10-50-1](https://asc.understandingaccounting.org/asc/250/10/#250-10-50-1), in a note to the annual financial statements for the fiscal year in which the change is made. ##### [250-10-45-16](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-16) Pending content: no Source downloaded (UTC): 2026-09-09T23:17:07.240Z to 2026-09-09T23:17:07.240Z Record version: sha256:20e0ea291e24b8809ea1a1e7cc77723f97aa9e8e609b4f33b80cf6c2036b28d9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As indicated in paragraph [270-10-45-15](https://asc.understandingaccounting.org/asc/270/10/#270-10-45-15), whenever possible, entities should adopt any accounting changes during the first interim period of a fiscal year. Changes in accounting principles and practices adopted after the first interim period in a fiscal year tend to obscure operating results and complicate disclosure of interim financial information. ##### [250-10-45-17](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-17) Pending content: no Source downloaded (UTC): 2026-09-09T23:17:07.240Z to 2026-09-09T23:17:07.240Z Record version: sha256:dcb36643acb3ad7896eba57290517549bf6c5ddf274aa61490467f0a18a78ef5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A change in accounting estimate shall be accounted for in the period of change if the change affects that period only or in the period of change and future periods if the change affects both. A [change in accounting estimate](https://asc.understandingaccounting.org/glossary/c/#change-in-accounting-estimate "A change that has the effect of adjusting the carrying amount of an existing asset or liability or altering the subsequent accounting for existing or future assets or liabilities. A change in accounting estimate is a necessary consequence of the assessment, in conjunction with the periodic presentation of financial statements, of the present status and expected future benefits and obligations associated with assets and liabilities. Changes in accounting estimates result from new information. Examples of items for which estimates are necessary are uncollectible receivables, inventory obsolescence, service lives and salvage values of depreciable assets, and warranty obligations.") shall not be accounted for by restating or retrospectively adjusting amounts reported in financial statements of prior periods or by reporting pro forma amounts for prior periods. ##### [250-10-45-18](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-18) Pending content: no Source downloaded (UTC): 2026-09-09T23:17:07.240Z to 2026-09-09T23:17:07.240Z Record version: sha256:afc3abfacb5f658fc954f51ef6bf55bd84e322cbc90bf8530e2f00211a97be0f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Distinguishing between a change in an accounting principle and a change in an accounting estimate is sometimes difficult. In some cases, a change in accounting estimate is effected by a change in accounting principle. One example of this type of change is a change in method of depreciation, amortization, or depletion for long-lived, nonfinancial assets (hereinafter referred to as depreciation method). The new depreciation method is adopted in partial or complete recognition of a change in the estimated future benefits inherent in the asset, the pattern of consumption of those benefits, or the information available to the entity about those benefits. The effect of the [change in accounting principle](https://asc.understandingaccounting.org/glossary/c/#change-in-accounting-principle "A change from one generally accepted accounting principle to another generally accepted accounting principle when there are two or more generally accepted accounting principles that apply or when the accounting principle formerly used is no longer generally accepted. A change in the method of applying an accounting principle also is considered a change in accounting principle."), or the method of applying it, may be inseparable from the effect of the change in accounting estimate. Changes of that type often are related to the continuing process of obtaining additional information and revising estimates and, therefore, shall be considered changes in estimates for purposes of applying this Subtopic. ##### [250-10-45-19](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-19) Pending content: no Source downloaded (UTC): 2026-09-09T23:17:07.240Z to 2026-09-09T23:17:07.240Z Record version: sha256:565ec31651bd40c46e34a69efdd73f1f50912e37f67a095f80410916cf444dde Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Like other changes in accounting principle, a change in accounting estimate that is effected by a change in accounting principle may be made only if the new accounting principle is justifiable on the basis that it is preferable. For example, an entity that concludes that the pattern of consumption of the expected benefits of an asset has changed, and determines that a new depreciation method better reflects that pattern, may be justified in making a [change in accounting estimate effected by a change in accounting principle](https://asc.understandingaccounting.org/glossary/c/#change-in-accounting-estimate-effected-by-a-change-in-accounting-principle "A change in accounting estimate that is inseparable from the effect of a related change in accounting principle. An example of a change in estimate effected by a change in principle is a change in the method of depreciation, amortization, or depletion for long-lived, nonfinancial assets."). (See paragraph [250-10-45-12](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-12).) ##### [250-10-45-20](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-20) Pending content: no Source downloaded (UTC): 2026-09-09T23:17:07.240Z to 2026-09-09T23:17:07.240Z Record version: sha256:29e1801ddf7f3a303cd5da1363b5c218e796faae8c8e300c368ceb9cb4356168 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. However, a change to the straight-line method at a specific point in the service life of an asset may be planned at the time some depreciation methods, such as the modified accelerated cost recovery system, are adopted to fully depreciate the cost over the estimated life of the asset. Consistent application of such a policy does not constitute a change in accounting principle for purposes of applying this Subtopic. ##### [250-10-45-21](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-21) Pending content: no Source downloaded (UTC): 2026-09-09T23:17:07.240Z to 2026-09-09T23:17:07.240Z Record version: sha256:a1e507f8e7aaf28f1249bbca040363dff43205de807517f29e9a92a37e23f65c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When an accounting change results in financial statements that are, in effect, the statements of a different reporting entity, the change shall be retrospectively applied to the financial statements of all prior periods presented to show financial information for the new reporting entity for those periods. Previously issued interim financial information shall be presented on a retrospective basis. However, the amount of interest cost previously capitalized through application of Subtopic 835-20 shall not be changed when retrospectively applying the accounting change to the financial statements of prior periods. #### Correction of an Error in Previously Issued Financial Statements ##### [250-10-45-22](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-22) Pending content: no Source downloaded (UTC): 2026-09-09T23:17:07.240Z to 2026-09-09T23:17:07.240Z Record version: sha256:0fb2953371a7aa0a7beb03c9110bb61c29af323dd8cc61bf0b2660bcc34a5593 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As indicated in paragraph [220-10-45-7A](https://asc.understandingaccounting.org/asc/220/10/#220-10-45-7A), net income for the period shall include all items of profit and loss recognized during the period, including accruals of estimated losses from loss contingencies, but shall not include corrections of errors from prior periods. As used in this Subtopic, the term _period_ refers to both annual and interim reporting periods. ##### [250-10-45-23](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-23) Pending content: no Source downloaded (UTC): 2026-09-09T23:17:07.240Z to 2026-09-09T23:17:07.240Z Record version: sha256:be2d918c0dc4830d885db1cd03e71c8d6144a82c7902d61b381ed665853935f5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Any error in the financial statements of a prior period discovered after the financial statements are issued or are available to be issued (as discussed in Section 855-10-25) shall be reported as an error correction, by restating the prior-period financial statements. [Restatement](https://asc.understandingaccounting.org/glossary/r/#restatement "The process of revising previously issued financial statements to reflect the correction of an error in those financial statements.") requires all of the following: 1. a The cumulative effect of the error on periods prior to those presented shall be reflected in the carrying amounts of assets and liabilities as of the beginning of the first period presented. 2. b An offsetting adjustment, if any, shall be made to the opening balance of retained earnings (or other appropriate components of equity or net assets in the statement of financial position) for that period. 3. c Financial statements for each individual prior period presented shall be adjusted to reflect correction of the period-specific effects of the error. ##### [250-10-45-24](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-24) Pending content: no Source downloaded (UTC): 2026-09-09T23:17:07.240Z to 2026-09-09T23:17:07.240Z Record version: sha256:1a48ae9d0e32e4beff2433776e8a42eb2edb9e7512ac393b009d4fb4dd117835 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Those items that are reported as error corrections shall, in single period statements, be reflected as adjustments of the opening balance of retained earnings. When comparative statements are presented, corresponding adjustments should be made of the amounts of net income (and the components thereof) and retained earnings balances (as well as of other affected balances) for all of the periods reported therein, to reflect the retroactive application of the error corrections. ##### [250-10-45-25](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-25) Pending content: no Source downloaded (UTC): 2026-09-09T23:17:07.240Z to 2026-09-09T23:17:07.240Z Record version: sha256:cbab061ef81d66b111f80085ae4dd398d54c5ee8177bec5ecf8db3a3955fcd9f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For purposes of this Subtopic, an adjustment related to prior interim periods of the current fiscal year is an adjustment or settlement of litigation or similar claims, of income taxes (except for the effects of retroactive tax legislation), of renegotiation proceedings, or of utility revenue under rate-making processes provided that the adjustment or settlement meets all of the following criteria: 1. a The effect of the adjustment or settlement is material in relation to income from continuing operations of the current fiscal year or in relation to the trend of income from continuing operations or is material by other appropriate criteria. 2. b All or part of the adjustment or settlement can be specifically identified with and is directly related to business activities of specific prior interim periods of the current fiscal year. 3. c The amount of the adjustment or settlement could not be reasonably estimated prior to the current interim period but becomes reasonably estimable in the current interim period. The criterion in (b) is not met solely because of incidental effects such as interest on a settlement. The criterion in (c) would be met by the occurrence of an event with currently measurable effects such as a final decision on a rate order. Treatment as adjustments related to prior interim periods of the current fiscal year shall not be applied to the normal recurring corrections and adjustments that are the result of the use of estimates inherent in the accounting process. Changes in provisions for doubtful accounts shall not be considered to be adjustments related to prior interim periods of the current fiscal year even though the changes result from litigation or similar claims. ##### [250-10-45-26](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-26) Pending content: no Source downloaded (UTC): 2026-09-09T23:17:07.240Z to 2026-09-09T23:17:07.240Z Record version: sha256:ab97240bf9a431f3ba09d8d21e47154bca28c215f53e2ae3582e3dd877465757 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If an item of profit or loss occurs in other than the first interim period of the entity's fiscal year and all or a part of the item of profit or loss is an adjustment related to prior interim periods of the current fiscal year, as defined in the preceding paragraph, the item shall be reported as follows: 1. a The portion of the item that is directly related to business activities of the entity during the current interim period, if any, shall be included in the determination of net income for that period. 2. b Prior interim periods of the current fiscal year shall be restated to include the portion of the item that is directly related to business activities of the entity during each prior interim period in the determination of net income for that period. 3. c The portion of the item that is directly related to business activities of the entity during prior fiscal years, if any, shall be included in the determination of net income of the first interim period of the current fiscal year. #### Materiality Considerations for Correction of an Error ##### [250-10-45-27](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-27) Pending content: no Source downloaded (UTC): 2026-09-09T23:17:07.240Z to 2026-09-09T23:17:07.240Z Record version: sha256:18ab4012eef988387824c92203d791b372d31cdf8b702b0e4f075f66eedac631 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In considering materiality for the purpose of reporting the correction of an error, amounts shall be related to the estimated income for the full fiscal year and also to the effect on the trend of earnings. (See paragraph [250-10-50-12](https://asc.understandingaccounting.org/asc/250/10/#250-10-50-12).) #### Historical Summaries of Financial Data ##### [250-10-45-28](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-28) Pending content: no Source downloaded (UTC): 2026-09-09T23:17:07.240Z to 2026-09-09T23:17:07.240Z Record version: sha256:303417f08c21ed043f81b7c02cfd218e041998d181c2c594ca8f9b21e341863b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. It has become customary for business entities to present historical, statistical-type summaries of financial data for a number of periods—commonly 5 or 10 years. Whenever error corrections have been recorded during any of the periods included therein, the reported amounts of net income (and the components thereof), as well as other affected items, shall be appropriately restated, with disclosure in the first summary published after the adjustments. (See paragraph [250-10-50-7A](https://asc.understandingaccounting.org/asc/250/10/#250-10-50-7A).)