Change in reporting entity

The phrase is narrower than it sounds. A supported change may involve replacing individual statements with consolidated or combined statements, or changing the entities in a combined group. It does not automatically describe every business combination, newly consolidated variable-interest entity, subsidiary sale, or internal segment reorganization.

Once the classification is supplied, comparative presentation depicts the new entity as though it had existed in the earlier periods. The bridge includes each entity, elimination, noncontrolling-interest or equity effect when applicable, tax consequence, cash-flow presentation, and note. If the underlying event belongs to Topics 805 or 810 instead, the file stops and routes there.

Keep the perimeter narrow

ASC 250-10-45-21 requires retrospective presentation when an accounting change makes the statements those of a different reporting entity. The paragraph also requires disclosure of the nature of and reason for the change.

For example, a newly presented combined group may recast earlier periods using the same included operations and required eliminations. A current purchase of an unrelated business follows the acquisition guidance and its actual acquisition date. It is not pulled into old periods through the Topic 250 entity-change rule.