PAS 8 Changes IN Accounting Policies PDF

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Summary

PAS 8 CHANGES IN ACCOUNTING POLICIES, ESTIMATES,AND ERRORI. NATUREPAS 8 prescribes the criteria for selecting, applying, and changing accounting policies and the accounting and disclosure of changes in accounting policies, changes in accounting estimates and correction of prior period errors. These ...

Description

PAS 8 CHANGES IN ACCOUNTING POLICIES, ESTIMATES, AND ERROR I.

NATURE

PAS 8 prescribes the criteria for selecting, applying, and changing accounting policies and the accounting and disclosure of changes in accounting policies, changes in accounting estimates and correction of prior period errors. These are intended to enhance the relevance, reliability and comparability of the entity’s financial statements. Two types of accounting changes are change in accounting policy and change in accounting estimates. Accounting policies are those adopted by an entity in preparing and presenting its financial statements. PAS 8 requires the consistent selection and application of only when it is required by a PFRS or results in relevant and more reliable information. II.

MEASUREMENT

Change in accounting policy is a change in measurement basis. The accounting treatment is based on transitional provision, retrospective application, and prospective application if retrospective application is impracticable. The effect of this is adjustment on the beginning balance of retained earnings, if accounted for retrospectively. Change in accounting estimate is change in realization of expected inflow of economic benefits from assets or liabilities. The accounting treatment is prospective application. The effects of adjustment would be in profit or loss of current and future periods, if the change affects both. Correction of prior period error is the misapplication of principles, oversight or misinterpretation of facts, and mathematical mistakes. The accounting treatment is retrospective restatement and prospective application if retrospective restatement is impracticable. The effect is adjustment o the beginning balance of retained earnings, if accounted for retrospectively. When it is difficult to distinguish a change in accounting policy from change in accounting estimate, the change is treated as change in accounting estimate. A voluntary change in accounting policy is accounted for by retrospective application. Early application of a PFRS is not a voluntary change in accounting policy....