Restatement is a statement-level act. The team identifies the statements and periods previously issued. It revises each affected line and per-share amount and marks the correction in the notes. It then applies the supplied audit and filing conclusions. The current ledger may need one cumulative entry; that entry is not the restatement itself.
Retrospective application can produce visually similar comparative columns, but the cause differs. Calling a supported principle change a restatement wrongly suggests the earlier statements were erroneous. Calling error correction a principle change hides that they were.
Correct the issued presentation
ASC 250-10-45-23 requires restatement when an error in previously issued statements is discovered after issuance or availability for issuance. ASC 250-10-45-24 requires corresponding adjustments to affected prior periods in comparative statements.
Suppose an entity omitted a Year 1 liability and discovers it in Year 3. The Year 3 entry records the remaining correction in the ledger. Restatement separately revises the affected Year 1 and Year 2 statement columns and disclosures. Whether an amended filing or other response is required lies outside this concept and depends on the applicable reporting conclusion.
Put the concept to work
Understand this concept
- Distinguish revision of previously issued statements from the current ledger entry used to record a correction.
Apply this concept
- Rebuild supplied affected comparative statements, opening equity, tax, EPS, and notes and tie them to the correction ledger.
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Build on these ideas
- Error in previously issued financial statements — Understand
To understand this concept: Required. Restatement communicates correction of an error.
- Restatement — Understand
To apply this concept: Required. Application requires the statement-versus-ledger distinction.
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Related concepts
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Use this idea next
- Comparative-statement error bridge — Understand
Required level here: understand. Required. The bridge operationalizes the restatement route.
- Correction entry — Understand
Required level here: understand. Required. A correction entry is only one part of the statement-level response.
- Error-correction disclosure — Understand
Required level here: understand. Required. The disclosure communicates the correction of issued statements.
Show 2 more next steps
- Restatement — Apply
Required level here: understand. Required. Application requires the statement-versus-ledger distinction.
- Retrospective application versus restatement — Understand
Required level here: understand. Required. The learner needs the error-correction route.