IAS 8 Best summary policies estimates and errors

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IAS 8 Best summary policies estimates and errors comprises a high level summary of the three items in this standard:

  1. Accounting policies,
  2. Accounting Estimates
  3. Errors

1. Accounting policies

Definition:

Accounting policies are the specific principles, bases, conventions, rules and practices applied by an entity in preparing and presenting financial statements.

Selection and application of accounting policies:

  • If a standard or interpretation deals with a transaction, use that standard or interpretation
  • If no standard or interpretation deals with a transaction, judgment should be applied. The following sources should be referred to, to make the judgement:
    • Requirements and guidance in other standards/interpretations dealing with similar issues
    • Definitions, recognition criteria in the framework
    • May use other GAAP
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Weighted average number of shares outstanding

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The calculation of the weighted average number of shares outstanding itself is not that difficult (see IAS 33 Example 2 or below example). And it is even easier if no changes have taken place in the number/amount of shares issued during the year. The general principle under IAS 33 is that shares should be included in calculating the weighted average number of shares outstanding during a year from the date the consideration is receivable (which in general is the date of the issue of the shares). [IAS 33 21]

Where shares are issued as consideration for the purchase of an asset or the payment of a liability, the shares are included in the calculation of … Read more