The FASB Provision

" APB Opinion No. 9 express that such "adjustments are rare in juvenile financial accounting."

The AICPA request to the FASB was "prompted by Securities and Exchange Commission ply administrative interpretations of APB Opinion No. 9 during 1975 limiting introductory period adjustments for outofcourt settlements of litigation." The dispute between the AICPA and the mho over the interpretation of APB Opinion No. 9 was a legitimate reason for the FASB to act.

FASB Statement No. 16 stated that items of "profit and loss related to the following shall be accounted for and inform as prior period adjustments and excluded from the determination of net income for the accredited period: (a) correction of an error in the financial statements of a prior period; and (b) adjustments that result from realization of income or benefits of pre acquisition operating loss carryforwards of purchased subsidiaries."

Statement No. 16 went into greater detail in relation to prior interim periods of a current fiscal year.

The FASB defined such an adjustment as a "settlement of litigation or similar claims, of income taxes, of renegotiation proceedings, or of utility revenue

The pay difference between 1990 and 1991 was a negative $8.8 one thousand million. As it happens, the world-wide recession and intense competition was not responsible for this whole earnings decline in quality. A onetime restructuring charge of $3.4 billion contributed to the loss. Further, an accounting change mandated by compliance with a federal law accounted for an additional $2.3 billion. Thus, only $3.1 billion of the earnings decline could be attributed to the recession and to the intense competition within the ready reckoner industry.

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