Gains And Losses From Prior Period Adjustments - Financial Reporting and Analysis

Prior period adjustments result from certain changes in accounting principles, the realization of income tax benefits of preacquisition operating loss carry forwards of purchased subsidiaries, a change in accounting entity, and corrections of errors in prior periods. Prior period adjustments are charged to retained earnings.

These items are a type of gain or loss but they never go through the income statement.

They are not recognized on the income statement. If material, they should be considered in analysis. Current period ratios would not be revised because these items relate to prior periods.

A review of the retained earnings account presented in the statement of stockholders’ equity will reveal prior period adjustments.

Exhibit presents a prior period adjustment from the 1998 annual report of the Nord Resources Corp. This prior period adjustment of $15,705,000 increased retained earnings.

Nord Resources Corp

Nord Resources Corp

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Financial Reporting and Analysis Topics