Prospective changes are used for changes in accounting estimate, such as a change in the expected useful life of a long-lived asset. A change from one inventory cost flow assumption to another is not a change in accounting estimate. It is a change in accounting principle.
A change from one inventory cost flow assumption to another is a change of accounting principle. According to the FASB Codification ? 250-10-45-5, a change of accounting principle shall be reported through retrospective application of the new accounting principle to all prior periods, unless it is impracticable to do so. Retrospective application requires all of the following: a. The cumulative effect of the change to the new accounting principle on periods prior to those presented shall be reflected in the carrying amounts of assets and liabilities as of the beginning of the first period presented. b. An offsetting adjustment, if any, shall be made to the opening balance of retained earnings (or other appropriate components of equity or net assets in the statement of financial position) for that period. c. Financial statements for each individual prior period presented shall be adjusted to reflect the period-specific effects of applying the new accounting principle.
Restatement is used only for error correction. A change in from one inventory cost flow assumption to another is a change in accounting principle. A change in accounting principle is not a correction of an error, as long as the change is from one generally accepted accounting principle to another generally accepted accounting principle.
This by itself is not an accepted method of accounting for any accounting change or correction.
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