a-company-discovers-an-error-in-its-financial-statements-from-the-previous-year-

Question

A company discovers an error in its financial statements from the previous year. How should this prior period adjustment be handled under both GAAP and IFRS?

Accepted Answer

Adjust retained earnings in the current period.

Answer

Adjust the current year's net income to reflect the error.

Answer

Restate the financial statements for the current year only.

Answer

Make a note in the current year's financial statements without adjusting figures.