IAS 8 Best summary policies estimates and errors comprises a high level summary of the three items in this standard:
- Accounting policies,
- Accounting Estimates
- Errors
Definition: Accounting policies are the specific principles, bases, conventions, rules and practices applied by an entity in preparing and presenting financial statements. |
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Selection and application of accounting policies:
Criteria: Develop and apply an accounting policy that results in information that is:
↓ Consistency of accounting policies: Policies should be consistent for similar transactions, events or conditions. IAS 8 Best summary policies estimates and errors IAS 8 Best summary policies estimates and errors IAS 8 Best summary policies estimates and errors IAS 8 Best summary policies estimates and errors |
IAS 8 Accounting estimates |
Only change a policy if:
The following are not changes in accounting policies:
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Principle If change is due to new standard / interpretation, apply transitional provisions. If no transitional provisions, apply retrospectively. |
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If impractical to determine period-specific effects or cumulative effects of the change, then retrospectively apply to the earliest period that is practicable. |
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Disclosure
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2. Changes in accounting principles |
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Definition A change in an accounting estimate is an adjustment of the carrying amount of an asset or liability, or related expense, resulting from reassessing the expected future benefits and obligations associated with the asset or liability. IAS 8 Best summary policies estimates and errors |
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Principle Recognise the change prospectively in profit or loss in:
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Disclosure
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IAS 8 Best summary policies estimates and errors IAS 8 Best summary policies estimates and errors IAS 8 Best summary policies estimates and errors | ||
3. Errors |
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Definition Prior period errors are omissions from, and misstatements in, an entity’s financial statements for one or more prior periods arising from failure to use/misuse of reliable information that:
Errors include:
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Principle Correct all errors retrospectively Restate the comparative amounts for prior periods in which error occurred or if the error occurred before that date – restate opening balance of assets, liabilities and equity for earliest period presented. |
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IAS 8 Best summary policies estimates and errors IAS 8 Best summary policies estimates and errors IAS 8 Best summary policies estimates and errors | ||
If impractical to determine period-specific effects of the error (or cumulative effects of the error), restate opening balances (restate comparative information) for earliest period practicable. |
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IAS 8 Best summary policies estimates and errors IAS 8 Best summary policies estimates and errors IAS 8 Best summary policies estimates and errors | ||
Disclosure
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See also: IFRS Community
IAS 8 Best summary policies estimates and errors
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