Flashcards IAS 8
IAS 8 : what is the objective ?
1) Criteria for selecting/changing accounting policies
2) acctg treatment + disclosures for Changes in accounting estimates
3) acctg treatment + disclosures for corrections of errors
IAS 8 : what contain accounting policies ?
In preparing + presenting FS :
1) Specific principles
2) Bases
3) Conventions
4) Rules + practices
IAS 8 : How to select + apply accounting policies ?
1) IFRS/IAS/IFRIC/SIC if exists
2) Use judgement :
IFRS w/similar issues
Conceptual Framework :
a - relevant
b - reliable
>faithful
>reflect economic substance
>neutral
>prudent
>complete
Other financial reporting standards (US GAAP, etc)
3) Apply consistently
IAS 8 : when can accounting policies be changed ?
1) if required by IFRS
2) to improve reliability of information
IAS 8 : How to account for a change in policy ?
1) transitional IFRS provisions
2) apply retrospectively
3) change from IAS 16 cost model to revaluation model -> not considered as a change in policy per IAS 8
IAS 8 : what is a change in accounting estimate ?
Change in present status/future benefits
As a result of NEW information (thus no errors) :
1) adjustment of a carrying amount
2) chge pattern of periodic consumption
3) NOT correction of error
IAS 8 : examples of change in accounting estimate ?
- bad debt provision
- depreciaiton
- warranty repairs provision
IAS 8 : how to account for change in accounting estimate ?
Prospectively
IAS 8 : difference account policies vs estimate ?
Accounting policies -> principles/measurement basis
chge from amort cost to FV
chge IAS 39-> IFRS 9
Accounting estimates -> accounts/patterns/specific amts
chge provisions
chge in estimated % of loss allowance
if it cannot be distinguised : -> assumed to be change in estimate
IAS 8 : definition of accounting errors ?
Omissions or misstatement in
recognition, measurement, presentaton, disclosure
in the FS for prior periods,
as a result of ignoring or misusing information :
- available when FS were authorised for issue
- could reasonably be expected to have been obtained + taken into account
Eg. Mistakes, oversights, misinterpretations, fraud
IAS 8 : how to account for accounting errors ?
If Material
-> restate retrospectively
opening bals + comparatives
If NOT Material
-> correction in current period
IAS 8 : definition of material ?
If they could,
- individually or collectively,
- influence the economic decisions of users
Depends on the
- size and
- nature
- judged in the surrounding circumstances.
IAS 8 : when is retrospective applicatin/restatement impracticable and what to do ?
Impractical is :
1) retro application/restatment not determinable
(period-specific or cumulative effect of change)
2) requires assumptions of retro mgmt intentions
3) Impossible to distinguish from info evidence that
- cicumstances existed at a prior date
+ were available prior to FS autorisation
Consequence :
Apply to earliest period practicable
IAS 8 : what does NOT represent a change in acct policy ?
Application of a policy newly to
1) a new type of transactions
(that differ in substance from prior trans)
2) a type of transactions that previously were immaterial
IAS 8 : disclosures for change in accounting policy ?
Application new IFRS :
1) title of IFRS
2) change in acctg policy in line we/transitional provisions
3) descr of transitional provisions
4) trans prov that have an effect on future periods
Voluntary policy change :
5) reasons is more reliable + relevant
New IFRS + voluntary policy change :
6) nature of change in policy
7) amt of adj for current + prior periods if practicable
- for each affected line item
- EPS basic + diluted
8) amt to periods prior to presented
9) when impracticable :
circumstances,
periods affected,
application start period
