Errors and changes in policy require retroactive treatment, a part of which is restatement of retained earnings.
Could you please describe to me how to restate retained earnings?
There’s a question in the (BPP) revision kit – I think it’s called Dexon. In note 4 to the question there’s a fraud discovered, 1.5 million of which related to the previous year. The question asks for Statement of Changes in Equity.
the answer shows what to do.
Bring forward the stated retained earnings, then adjust for the fundamental error, and show the restated figure for the retained earnings
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