ias 8

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Accounting policy – meaning

IAS 8: Accounting Polices, Changes in Accounting Estimates and Errors lays down criteria for the selection of accounting policies and prescribes circumstances in which an entity may change an accounting policy. The standard also deals with accounting treatment of changes in accounting policies, changes in accounting estimates and correction of errors.

Accounting policies are the specific principles, bases, conventions, rules … Read the rest

financial accounting class

Change in accounting estimates – meaning

A change in accounting estimates is an adjustment of the carrying amount of an asset or liability, or related expenses, resulting from reassessing the expected future benefits and obligations associated with the asset or liability.

Examples of the change in accounting estimates include; change in the useful life of the non-current asset, change in the provision of bad debts, change … Read the rest

The required accounting treatment for the Correction of an Error.

IAS 8: Accounting Polices, Changes in Accounting Estimates and Errors lays down criteria for the selection of accounting policies and prescribes circumstances in which an entity may change an accounting policy. The standard also deals with accounting treatment of changes in accounting policies, changes in accounting estimates and correction of errors.

The following are steps required to correct previous years

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The required treatment for the change in Accounting Policy.

The entity shall apply the change retrospectively. This means that the accounts must be altered so that they contain the numbers which would have been there had the new policy always been in force. However, this will not apply if it is impracticable to determine either the period specific effects or the cumulative effect of the change. The initial application … Read the rest