W.R. Grace & Co. is a global specialty chemicals company. The following disclosure note was included in recent financial statements:

Change in Accounting Principle
In the third quarter of 2008, Grace changed its method of accounting for the cost of its U.S. inventories from the last-in/first-out method, or LIFO, to the first-in/first-out method, or FIFO. Grace decided to make this change in order to achieve a consistent inventory costing method for both U.S. and non-U.S. inventories. Grace has retrospectively restated prior periods' financial statements for all periods presented herein to account for all inventories using FIFO in compliance with generally accepted accounting principles.

Why does GAAP require W.R. Grace to retrospectively adjust prior periods' financial statement for this type of accounting change?

  • CreatedJuly 02, 2013
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