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IAS 8 - Accounting Policies, Changes in Accounting Estimates and Errors PDF
IAS 8 - Accounting Policies, Changes in Accounting Estimates and Errors PDF
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IAS 8
CONTENTS
from paragraph
INTRODUCTION
IN1
SCOPE
DEFINITIONS
ACCOUNTING POLICIES
13
14
19
Retrospective application
22
23
Disclosure
28
32
Disclosure
39
ERRORS
41
43
49
50
EFFECTIVE DATE
54
55
APPENDIX
Amendments to other pronouncements
FOR THE ACCOMPANYING DOCUMENTS LISTED BELOW, SEE PART B OF THIS
EDITION
APPROVAL BY THE BOARD OF IAS 8 ISSUED IN DECEMBER 2003
BASIS FOR CONCLUSIONS
IMPLEMENTATION GUIDANCE
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Introduction
IN1
IN3
IN4
(a)
(b)
(c)
(d)
(e)
The main changes from the previous version of IAS 8 are described below.
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Materiality
IN7
the accounting policies in IFRSs need not be applied when the effect of
applying them is immaterial. This complements the statement in IAS 1
that disclosures required by IFRSs need not be made if the information is
immaterial.
(b)
(c)
IN9
(b)
information
from
financial
Impracticability
IN10
IN11
(b)
the entity changes the comparative information as if the new accounting policy
had been applied, or the error had been corrected, prospectively from the
earliest date practicable.
Fundamental errors
IN12
The Standard eliminates the concept of a fundamental error and thus the
distinction between fundamental errors and other material errors. The
Standard defines prior period errors.
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Disclosures
IN13
IN14
Other changes
IN15
The presentation requirements for profit or loss for the period have been
transferred to IAS 1.
IN16
(b)
The consensus in SIC-18 incorporated the consensus in SIC-2, and requires that
when an entity has chosen a policy of capitalising borrowing costs, it should
apply this policy to all qualifying assets.
IN17
IN18
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The objective of this Standard is to prescribe the criteria for selecting and
changing accounting policies, together with the accounting treatment and
disclosure of changes in accounting policies, changes in accounting estimates
and corrections of errors. The Standard is intended to enhance the relevance
and reliability of an entitys financial statements, and the comparability of those
financial statements over time and with the financial statements of other
entities.
Scope
3
Definitions
5
The following terms are used in this Standard with the meanings
specified:
(b)
(c)
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(d)
SIC Interpretations.1
(b)
(b)
(c)
(i)
Definition of IFRSs amended after the name changes introduced by the revised Constitution of the IFRS
Foundation in 2010.
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(ii)
(b)
Accounting policies
Selection and application of accounting policies
7
IFRSs set out accounting policies that the IASB has concluded result in financial
statements containing relevant and reliable information about the transactions,
other events and conditions to which they apply. Those policies need not be
applied when the effect of applying them is immaterial. However, it is
inappropriate to make, or leave uncorrected, immaterial departures from IFRSs
to achieve a particular presentation of an entitys financial position, financial
performance or cash flows.
10
IASCs Framework for the Preparation and Presentation of Financial Statements was adopted by the IASB in
2001. In September 2010 the IASB replaced the Framework with the Conceptual Framework for Financial
Reporting. Paragraph 25 was superseded by Chapter 3 of the Conceptual Framework.
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(b)
(i)
represent
faithfully
the
financial
position,
financial
(ii)
11
(iii)
(iv)
(v)
(b)
12
An entity shall select and apply its accounting policies consistently for
similar transactions, other events and conditions, unless an IFRS
specifically requires or permits categorisation of items for which
different policies may be appropriate. If an IFRS requires or permits such
categorisation, an appropriate accounting policy shall be selected and
applied consistently to each category.
15
(a)
is required by an IFRS; or
(b)
Reporting.
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16
(b)
17
18
(b)
20
For the purpose of this Standard, early application of an IFRS is not a voluntary
change in accounting policy.
21
Retrospective application
22
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extent that it is impracticable to determine either the period-specific
effects or the cumulative effect of the change.
24
25
26
27
Disclosure
28
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(b)
(c)
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(d)
(e)
(f)
for the current period and each prior period presented, to the
extent practicable, the amount of the adjustment:
(i)
(ii)
(g)
(h)
(b)
(c)
for the current period and each prior period presented, to the
extent practicable, the amount of the adjustment:
(i)
(ii)
(d)
(e)
When an entity has not applied a new IFRS that has been issued but is not
yet effective, the entity shall disclose:
(a)
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(b)
31
(b)
(c)
(d)
(e)
either:
(i)
(ii)
bad debts;
(b)
inventory obsolescence;
(c)
(d)
(e)
warranty obligations.
33
34
35
36
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the period of the change, if the change affects that period only; or
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(b)
the period of the change and future periods, if the change affects
both.
37
38
Disclosure
39
40
Errors
41
42
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(b)
44
45
46
The correction of a prior period error is excluded from profit or loss for the
period in which the error is discovered. Any information presented about prior
periods, including any historical summaries of financial data, is restated as far
back as is practicable.
47
48
(b)
(c)
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(i)
(ii)
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(d)
51
52
(b)
would have been available when the financial statements for that prior
period were authorised for issue
from other information. For some types of estimates (eg a fair value
measurement that uses significant unobservable inputs), it is impracticable to
distinguish these types of information. When retrospective application or
retrospective restatement would require making a significant estimate for
which it is impossible to distinguish these two types of information, it is
impracticable to apply the new accounting policy or correct the prior period
error retrospectively.
53
Hindsight should not be used when applying a new accounting policy to, or
correcting amounts for, a prior period, either in making assumptions about
what managements intentions would have been in a prior period or estimating
the amounts recognised, measured or disclosed in a prior period. For example,
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when an entity corrects a prior period error in measuring financial assets
previously classified as heldtomaturity investments in accordance with IAS 39
Financial Instruments: Recognition and Measurement, it does not change their basis of
measurement for that period if management decided later not to hold them to
maturity. In addition, when an entity corrects a prior period error in calculating
its liability for employees accumulated sick leave in accordance with IAS 19
Employee Benefits, it disregards information about an unusually severe influenza
season during the next period that became available after the financial
statements for the prior period were authorised for issue. The fact that
significant estimates are frequently required when amending comparative
information presented for prior periods does not prevent reliable adjustment or
correction of the comparative information.
Effective date
54
An entity shall apply this Standard for annual periods beginning on or after
1 January 2005. Earlier application is encouraged. If an entity applies this
Standard for a period beginning before 1 January 2005, it shall disclose that fact.
54A
[This paragraph refers to amendments that are not yet effective, and is therefore not
included in this edition.]
54B
[This paragraph refers to amendments that are not yet effective, and is therefore not
included in this edition.]
54C
IFRS 13 Fair Value Measurement, issued in May 2011, amended paragraph 52. An
entity shall apply that amendment when it applies IFRS 13.
This Standard supersedes IAS 8 Net Profit or Loss for the Period, Fundamental Errors
and Changes in Accounting Policies, revised in 1993.
56
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(a)
(b)
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Appendix
Amendments to other pronouncements
The amendments in this appendix shall be applied for annual periods beginning on or after
1 January 2005. If an entity applies this Standard for an earlier period, these amendments shall be
applied for that earlier period.
*****
The amendments contained in this appendix when this Standard was revised in 2003 have been
incorporated into the relevant pronouncements published in this volume.
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