The accounts changes relate to AOL transactions

The move comes after the media giant paid regulators $300m (�159m) last year to settle civil fraud charges arising from how various AOL deals were booked.

Improper accounting was found to have led to its profits being inflated.

Since then, an independent examiner has been studying online advertising deals concluded by AOL with 17 firms.

Under scrutiny

The restatement will have a limited impact on the firm's balance sheet.

As a result, its net income will be reduced by $162m in 2000 and 2001 but will actually rise by $126m for the years 2002-2005.

The impact for the first six months of 2006 will be a gain of $15m.

The independent examiner concluded that certain transactions under review had been accounted for improperly Time Warner

The transactions scrutinised took place between 2000 and 2001, shortly before and after Time Warner bought AOL in what was then the world's largest takeover deal.

Since then, AOL's fortunes have waned and Time Warner has come under pressure to sell the business.

"Under the terms of the Securities and Exchange Commission settlement, the company is required to restate any transactions that the independent examiner determined were accounted for improperly," the firm said in a statement.

"The independent examiner concluded that certain transactions under review had been accounted for improperly because the historical accounting did not reflect the substance of the arrangements."

Time Warner's shares closed marginally up in Thursday trading.