PAS 8 prescribes the criteria for selecting and applying accounting policies and for accounting for and disclosing changes in accounting policies, changes in accounting estimates, and corrections of prior period errors. Accounting policies are the specific principles, bases, conventions, rules, and practices adopted by an entity in preparing and presenting its financial statements. Philippine Financial Reporting Standards are comprised of Philippine Financial Reporting Standards, Philippine Accounting Standards, and Interpretations adopted by the Financial Reporting Standards Council. A change in accounting policy is accounted for retrospectively, while a change in accounting estimate is accounted for prospectively. Errors refer to omissions and misstatements in an entity's financial statements and are corrected retrospectively.
PAS 8 prescribes the criteria for selecting and applying accounting policies and for accounting for and disclosing changes in accounting policies, changes in accounting estimates, and corrections of prior period errors. Accounting policies are the specific principles, bases, conventions, rules, and practices adopted by an entity in preparing and presenting its financial statements. Philippine Financial Reporting Standards are comprised of Philippine Financial Reporting Standards, Philippine Accounting Standards, and Interpretations adopted by the Financial Reporting Standards Council. A change in accounting policy is accounted for retrospectively, while a change in accounting estimate is accounted for prospectively. Errors refer to omissions and misstatements in an entity's financial statements and are corrected retrospectively.
PAS 8 prescribes the criteria for selecting and applying accounting policies and for accounting for and disclosing changes in accounting policies, changes in accounting estimates, and corrections of prior period errors. Accounting policies are the specific principles, bases, conventions, rules, and practices adopted by an entity in preparing and presenting its financial statements. Philippine Financial Reporting Standards are comprised of Philippine Financial Reporting Standards, Philippine Accounting Standards, and Interpretations adopted by the Financial Reporting Standards Council. A change in accounting policy is accounted for retrospectively, while a change in accounting estimate is accounted for prospectively. Errors refer to omissions and misstatements in an entity's financial statements and are corrected retrospectively.
PAS 8 prescribes the criteria for selecting and applying accounting policies and for accounting for and disclosing changes in accounting policies, changes in accounting estimates, and corrections of prior period errors. Accounting policies are the specific principles, bases, conventions, rules, and practices adopted by an entity in preparing and presenting its financial statements. Philippine Financial Reporting Standards are comprised of Philippine Financial Reporting Standards, Philippine Accounting Standards, and Interpretations adopted by the Financial Reporting Standards Council. A change in accounting policy is accounted for retrospectively, while a change in accounting estimate is accounted for prospectively. Errors refer to omissions and misstatements in an entity's financial statements and are corrected retrospectively.
• 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.
Conceptual Framework & Acctg.
1 Standards (by: Zeus Vernon B. Millan) Accounting policies
• Accounting policies are “the specific principles,
bases, conventions, rules and practices applied by an entity in preparing and presenting financial statements.” (PAS 8.5) • Accounting policies are the relevant PFRSs adopted by an entity in preparing and presenting its financial statements Conceptual Framework & Acctg. Standards (by: Zeus Vernon B. Millan) 2 PFRSs
• Philippine Financial Reporting Standards (PFRSs) are
Standards and Interpretations adopted by the Financial Reporting Standards Council (FRSC). They comprise the following: 1. Philippine Financial Reporting Standards (PFRSs); 2. Philippine Accounting Standards (PASs); and 3. Interpretations
Conceptual Framework & Acctg.
3 Standards (by: Zeus Vernon B. Millan) Conceptual Framework & Acctg. 4 Standards (by: Zeus Vernon B. Millan) Conceptual Framework & Acctg. 5 Standards (by: Zeus Vernon B. Millan) • When it is difficult to distinguish a change in accounting policy from a change in accounting estimate, the change is treated as a change in an accounting estimate.
• An entity shall change an accounting policy only if the change:
1. is required by a PFRS; or 2. results to a more relevant and reliable information about an entity’s financial position, performance, and cash flows.
Conceptual Framework & Acctg.
6 Standards (by: Zeus Vernon B. Millan) Examples of changes in accounting policy 1. Change from FIFO cost formula for inventories to the Average cost formula. 2. Change in the method of recognizing revenue from long-term construction contracts. 3. Change to a new policy resulting from the requirement of a new PFRS. 4. Change in financial reporting framework, such as from PFRS for SMEs to full PFRSs. 5. Initial adoption of the revaluation model for property, plant, and equipment and intangible assets. 6. Change from the cost model to the fair value model of measuring investment property. 7. Change in business model for classifying financial assets resulting to reclassification between financial asset categories.
Conceptual Framework & Acctg.
7 Standards (by: Zeus Vernon B. Millan) Examples of changes in accounting estimate
1. Change in depreciation or amortization methods
2. Change in estimated useful lives of depreciable assets 3. Change in estimated residual values of depreciable assets 4. Change in required allowances for impairment losses and uncollectible accounts 5. Changes in fair values less cost to sell of non-current assets held for sale and biological assets
Conceptual Framework & Acctg.
8 Standards (by: Zeus Vernon B. Millan) Errors
• Errors include the effects of:
1. Mathematical mistakes 2. Mistakes in applying accounting policies 3. Oversights or misinterpretations of facts; and 4. Fraud
Conceptual Framework & Acctg.
9 Standards (by: Zeus Vernon B. Millan) APPLICATION OF CONCEPTS PROBLEM 2: FOR CLASSROOM DISCUSSION
Conceptual Framework & Acctg. Standards (by: Zeus Vernon B. Millan) 10
QUESTIONS???? REACTIONS!!!!!
Conceptual Framework & Acctg.
11 Standards (by: Zeus Vernon B. Millan) Conceptual Framework & Acctg. Standards (by: Zeus Vernon B. Millan) 12