Chapter 20 of Stice and Stice 19^th edition began with an illustration of the impact that Statement No. 106 had on the earnings of several companies. Recall that General Motors reported a $33 billion decline in income in 1992. One-time "hits" such as this can make comparison of financial statements and ratios over time difficult.

This debates relates to the different methods for dealing with changes in accounting principle by either making a cumulative adjustment or restating the financial statements.

Make an argument for a cumulative adjustment that summarizes the new standard's effect on prior periods is sufficient. This is the approach that was required at the time GM adopted Statement No. 106.

Comment on cumulative adjustments for dealing with changes in accounting principle. is this the best approach?