Fourmi Industrials, Inc., prepares 3-year comparative financial statements. In Year 3, Fourmi discovered an error...
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Fourmi Industrials, Inc., prepares 3-year comparative financial statements. In Year 3, Fourmi discovered an error in the previously issued financial statements for Year 1. The error affects the financial statements that were issued in Years 1 and 2 . How should the company report the error? The financial statements for Years 1 and 2 should not be restated; the cumulative effect of the error on Years 1 and 2 should be reflected in the carrying amounts of assets and liabilities as of the beginning of Year 3. The financial statements for Years 1 and 2 should not be restated; financial statements for Year 3 should disclose the fact that the error was made in prior years. The financial statements for Years 1 and 2 should be restated; an offsetting adjustment to the cumulative effect of the error should be made to the comprehensive income in the Year 3 financial statements. The financial statements for Years 1 and 2 should be restated; the cumulative effect of the error on Years 1 and 2 should be reflected in the carrying amounts of assets and liabilities as of the beginning of Year 3
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Fourmi Industrials, Inc., prepares 3-year comparative financial statements. In Year 3, Fourmi discovered an error in the previously issued financial statements for Year 1. The error affects the financial statements that were issued in Years 1 and 2 . How should the company report the error? The financial statements for Years 1 and 2 should not be restated; the cumulative effect of the error on Years 1 and 2 should be reflected in the carrying amounts of assets and liabilities as of the beginning of Year 3. The financial statements for Years 1 and 2 should not be restated; financial statements for Year 3 should disclose the fact that the error was made in prior years. The financial statements for Years 1 and 2 should be restated; an offsetting adjustment to the cumulative effect of the error should be made to the comprehensive income in the Year 3 financial statements. The financial statements for Years 1 and 2 should be restated; the cumulative effect of the error on Years 1 and 2 should be reflected in the carrying amounts of assets and liabilities as of the beginning of Year 3 