prior period adjustment


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prior period adjustment

Correction of a material mistake in reported income in an earlier financial statement. Although prior period adjustments affect retained earnings, they are not used to alter income in the current period.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
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Recommendation: To help assure that prior period adjustments are properly identified and reported in the CFS, the the Secretary of the Treasury should direct the Fiscal Assistant Secretary to enhance the SOP entitled "Analyzing Agency Restatements" to include procedures for analyzing the overall impact of entities' restatements on the CFS and documenting the analysis and related conclusion.
16 eliminated virtually all prior period adjustments, the reason for issuing SAS no.
Prior period adjustments to retained earnings arise from changes in accounting principles, a change in accounting entity or corrections of errors of prior periods.
Line 19 requires the taxpayer to list "[e]xtraordinary items and prior period adjustments." The term "extraordinary," however, is not defined in the instructions.
Due to our data retention policies, we do not have data to reconcile periods prior to the fourth quarter of 2016, but our estimates suggest the prior period adjustments are smaller than those in the fourth quarter of 2016." Watch for updated numbers in the report, as well as management commentary on user engagement.
Any material gains and losses under consideration for reporting, however, should be closely analyzed to determine if they are either the result of 1) improper estimates that were biased or not based upon reasonable assumptions and the best information available at the time they were made or last adjusted (and therefore constitute errors, the correction of which require presentation under GAAP as prior period adjustments pursuant to ASC 250-1045-24) or 2) current changes in estimated lives or salvage values attributable to changes in circumstances that should be accounted for either currently or prospectively as a change in estimate, with all required disclosures, pursuant to ASC 250-10-45-17 and 250-1050-4.
Specifically, the footnote disclosure related to the restatements was titled Prior Period Adjustments, which could be misinterpreted since most of the corrections discussed in the note were not prior period adjustments.
Although most unusual items are disclosed in the income statement, an exception is made for prior period adjustments due to errors.
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