regulated operations and rate-making

Presentation3

1. 250-10Overall250 Accounting Changes and Error Corrections

   ASC 250-10 governs how entities report the three types of accounting changes (change in accounting principle, change in accounting estimate, change in reporting entity) and the correction of errors in previously issued financial statements. The default rule is retrospective application for changes in principle and changes in reporting entity, prospective treatment (current and future periods) for changes in estimate, and restatement for error corrections. A change in principle is permitted only if required by a Codification update or justified as preferable, and retrospective application may be limited only where it is "impracticable" under the narrow conditions in 250-10-45-9.

2. 250-978Real Estate—Time-Sharing Activities250 Accounting Changes and Error Corrections

   This Subtopic tells time-share sellers how to account for a change in the delineation of a time-share project or its phases. If the change results from a significant change in facts and circumstances about the project's development (e.g., major sales price or discount revisions, construction cost or inflation changes, temporary construction delays, design changes, or a shift toward more luxury units), it is a change in accounting estimate under Subtopic 250-10, recorded as a current-period adjustment per 978-330-35-1. If there is no such change in facts and circumstances, the change is a change in the method of applying an accounting principle under Subtopic 250-10.

3. 250-980Regulated Operations250 Accounting Changes and Error Corrections

   This Subtopic applies the general accounting change and error correction rules of Topic 250 to entities with regulated operations that meet the criteria of paragraph 980-10-15-2 (so that costs designated for future recovery by the regulator are probable of recovery). Its core rule is that a change in accounting method that does not affect costs allowable for rate-making purposes is reported the same way an unregulated entity would report it, whereas a change that does affect allowable costs is generally implemented the way it is implemented for regulatory purposes. It also confirms that prior period adjustments are limited to error corrections and prior interim period adjustments of the current fiscal year, and that previously unaccrued estimated refunds are charged to income when the accrual criteria are first met.