How a change in accounting principle will be reported in the financial statement?

A change in accounting principle is typically reported in the financial statements retrospectively, meaning that prior periods are adjusted as if the new principle had always been in effect. The cumulative effect of the change is usually reflected in the retained earnings at the beginning of the earliest period presented. Additionally, the financial statements should disclose the nature of the change, the reason for it, and its impact on the financial statements. This ensures transparency and helps users understand the effects of the change on the company’s financial position and results.