Distinguish between changes in accounting entity which are c

Distinguish between “changes in accounting entity”, which are covered in ASC 250, and accounting changes after acquisitions, which are covered in ASC 805 “business combinations.”

Solution

Change in accounting entity or reporting entity is covered under ASC 250-10-20 and it covers changes like:

However, for every change, entity has to disclose the reason for the change and the effect of the change on profits.

Accounting changes after acquisition covers changes like: