W.R. Grace & Co. is a global specialty chemicals company. The following disclosure note was included in recent financial statements:
Change in Accounting Principle
In the third quarter of 2008, Grace changed its method of accounting for the cost of its U.S. inventories from the last-in/first-out method, or LIFO, to the first-in/first-out method, or FIFO. Grace decided to make this change in order to achieve a consistent inventory costing method for both U.S. and non-U.S. inventories. Grace has retrospectively restated prior periods' financial statements for all periods presented herein to account for all inventories using FIFO in compliance with generally accepted accounting principles.
Required:
Why does GAAP require W.R. Grace to retrospectively adjust prior periods' financial statement for this type of accounting change?