A change in an accounting principal is a change in a method used, such as using a different depreciation method or switching from LIFO to FIFO. An accounting estimate change could be the recalculation of the useful life of an asset.

In the case of GB, the management asserted that it made a change in its accounting estimate when it moved from the cost to cost method of percentage of completion revenue recognition to one of earned value. the assertion was that it still used the percentage of completion, revenue recognition method and therefore was not required to disclose the change in it's financials. A change in accounting principal requires disclosure in the period it is made along with justification for the change.

The current standard requires that change in accounting estimate is accounted for in the period it affects and any future periods. a change in accounting principal should be reported retrospectively (for a cumulative effect).

In your post, you mentioned Gb...What does GB stand for?

As you mentioned a change in accounting estimate "is accounted for in the period it affects and any future period" To add a change in accounting principal requires a retrospective adjustment. This is needed for comparability reasons.

Question f:: As mentioned ,a change in accounting principal requires a retrospective adjustment. What accounts should we make for use for the adjustment......assume we have to make a change because we changed from weighted average to FIFO....which account would be debited and which account would be credited?