ASUPAN, NHANINA B.

AC 510 (TTH 10:30 AM 12:00NN)

PAS 8: ACCOUNTING POLICIES, CHANGES IN ACCOUNTING ESTIMATES AND ERRORS

Change in Accounting Estimate

Examples

Recognized currently
and prospectively

Errors

Accounting Policies

Heirarchy of
guidance in
selecting

Prior Period Errors

Changes in
accounting
policies

Bad debts

Inventory
obsolescence

FV of financial
assets/liabilities

Useful lives of, or

expected pattern of
consumption of the
future economic
benefits embodied in,
depreciable assets

Warranty
obligations

a) the period of the

change, if the
change affects that
period only

b) the period of the

change and future
periods, if the
change affects both

a) requirements of
current standards
dealing with similar
matters

b) definition,
recognition criteria
and measurement
concepts for assets,
liabilities, income
and expenses in the
Conceptual
Framework for
Financial Reporting

c) most recent
pronouncements of
other standardsetting bodies

made only when

required by an
accounting
standard or an
interpretation of
the standard

the change results

in more relevant
and faithfully
represented
information about
the financial
position,
performance and
cash flows of the
entity

not changes in acct.

policies

a) application of an
acct. policy for
transactions, other
events or conditions
that differ in
substance from those
previously occuring

b) application of a
new accounting policy
for transactions,
other events or
conditions that did
not occur previously
or were immaterial

Correct
Retrospectively

Application

In accordance with
Transitional
Provisions

Provisions when
required by a
standard or an
interpretation

Retrospectively

if the standard
contains no
transitional
provisions

accounting
policy is changes
voluntarily

a) restating the
comparative
amounts for the
prior period(s)
presented in
which the error

b) restating the
opening balances
of assets,
liabilities and
equity for the
earliest prior
period presented