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Dmitriy789 [7]
3 years ago
12

Cuthbert Industrials, Inc., prepares 3-year comparative financial statements. In Year 3, Cuthbert discovered an error in the pre

viously issued financial statements for Year 1. The error affects the financial statements that were issued in Years 1 and 2. How should the company report the error?
Computers and Technology
1 answer:
Lelechka [254]3 years ago
8 0

Answer:

Restate financial statement for the first and second year.

Prepare financial statement of year 3 reflecting the effects of error from year one and two

Explanation:

A revision of the the entire financial statement from year one will be helpfull, when this is re-stated for the first and second year. Then in stating the amount of assets and liabilities carried into year three, the cummulative effect of the error from the previous two years should be reflected.

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