f7課件22 ias8 accounting policies changes in accounting_W

1、IAS8Accountingpolicies,changes in accounting estimates and errorsLevel1Level 2OptionalAccounting policiesYYchanges in accounting estimates and errorsYYAccountingpoliciesAccounting policiesAccounting policies are the specific principles, bases, conventions, rules and practices adopted by an entity in

2、 preparing and presenting financial statements.An entity must select and apply its accounting policies for a period consistently for similar transactionsChanges in accounting policiesThe same accounting policies are usually adopted from period to period, to allow users to analyse trends over time in

3、 profit, cash flows and financial position. Changes in accounting policy will therefore be rare and should be made only if:(a) The change is required by an IFRS; or(b) The change will result in a more appropriate presentation of events or transactions in the financial statements of the entity, provi

4、ding more reliable and relevant information.The standard highlights two types of event which do not constitute changes in accounting policy:a)Adopting an accounting policy for a new type of transactionor event not dealt with previously by the entityAdopting a new accounting policy for a transaction

5、or event which has not occurred in the past or which was not materialb)In the case of tangible non-current assets, if a policy of revaluation is adopted for the first time then this is treated, not as a change of accounting policy under IAS 8A change in accounting policy must be applied retrospectiv

6、ely. Retrospective application means that the new accounting policy is applied to transactions and events as if it had always been in use. In other words, at the earliest date such transactions or events occurred, the policy is applied from that date.ExampleA company has always valued inventory on a

7、 FIFO (first in, first out) basis. In 20X9 it decides to switch to the weighted average method of valuation. Gross profit in the 20X8 financial statements was calculated as follows.$000 869Revenue Cost of sales:Opening inventory PurchasesClosing inventory Gross profit135246(174)(207)662In order to p

8、repare comparative figures for 20X8 showing the change of accounting policy, it is necessary to recalculate the amounts for 20X7, so that the opening inventory for 20X8 is valued on a weighted average basis.It is established that opening inventory for 20X8 based on the weighted average method would

9、be $122,000 and closing inventory would be $143,000. So the 20X8 gross profit now becomes:$000 869Revenue Cost of sales:Opening inventory PurchasesClosing inventory122246(143)(225)644This shows $18,000 lower gross profit for 20X8 which will reduce net profit and retained earnings by the same amount.

10、 The opening inventory for 20X9 will be $143,000 rather than$174,000 and the statement of changes in equity for 20X9 will show an $18,000 adjustment to opening retained earnings.Youre a Champion!Thanks for staying with us. You have finished this task.Changes in accounting estimates and errorsAccount

11、ing estimatesEstimates arise in relation to business activities because of the uncertainties inherent within them. Judgements are made based on the most up to date information and the use of such estimates is a necessary part of the preparation of financial statements.Here are some examples of accou

12、nting estimates:a) A necessary irrecoverable debt allowanceb) Useful lives of depreciable assetsc) Provision for obsolescence of inventoryChanges in accounting estimate are not applied retrospectively.ErrorsErrors discovered during a current period which relate to a prior period may arise through:(a

13、) Mathematical mistakes(b) Mistakes in the application of accounting policies(c) Misinterpretation of facts(d) Oversights(e) FraudPrior period errors: correct retrospectively. So that the financial statements are presented as if the error had never occurred.Only where it is impracticable to determin

14、e the cumulative effect of an error on prior periods can an entity correct an error prospectively.ExIn late March 2008 the directors of Dexon discovered a material fraud perpetrated by the companys credit controller that had been continuing for some time. Investigations revealed that a total of $4 m

15、illion of the trade receivables as shown in the statement of financial position at 31 March 2008 had in fact been paid and the money had been stolen by the credit controller. An analysis revealed that $15 million had been stolen in the year to 31 March 2007 with the rest being stolen in the current

16、year. Dexon is not insured for this loss and it cannot be recovered from the credit controller, nor is it deductible for tax purposes.SolutionYoure a Champion!Thanks for staying with us. You have finished this task.Pilot Q7Which of the following would be a change in accounting policy in accordance w

17、ith IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors?A.Adjusting the financial statements of a subsidiary prior to consolidation as its accounting policies differ from those of its parentA change in reporting depreciation charges as cost of sales rather than as administrative ex

18、pensesDepreciation charged on reducing balance method rather than straight lineReducing the value of inventory from cost to net realisable value due to a valid adjusting event after the reporting periodB.C.D.2014/12 Q1Which of the following is a change of accounting policy under IAS 8Accounting Policies, Changes in AccountingEstimates and Errors?A.Classifying commission earned as revenue in the statement of profit or loss, having previously classified it as other operating incomeSwitching to purchasin