Accouting changes ASPE 1506 IAS 8

Question 1

What are the three types of Accounting Changes
and how is each accounted for?

Answer 1

ASPE 1506

Changes in accounting policy
* Only permitted if it results in statements providing more relevant information (unless a specific section allows an accounting choice without the need to meet requirements in this section e.g., use of taxes payable vs. future income tax method) or there is a new or revised handbook section issued

• Applied retrospectively i.e., adjust opening balances for the earliest prior period presented and present comparatives as if the new accounting policy had always been applied

‒ Exceptions are when adopting a new standard and there are specific transitional provisions or when it is not practical to determine the effects of the change on one or more prior periods

Change in accounting estimate

• Occurs when changes in circumstances occur
• Applied prospectively i.e.no restatement of prior periods Correction of prior period errors
• Results from a mathematical error, misinterpretation of information, oversight of available info etc.
• Correction of error is retrospective (see above description)

IAS 8
* Same except that:

‒ Exemption from restating prior periods
for correction of error if it is impracticable to do
so
‒ There are no instances where changes in
accounting policies are permitted without
meeting the criteria