05 Accounting Changes & Error Correction Flashcards
Specific principles, bases, conventions, rules and practices applied by an entity in preparing and presenting FS.
Accounting Policies
Standards and interpretations adopted by the FSRSC
PFRS
What comprises PFRS?
PFRS
PAS
Interpretations
What ios the hierarchy of reporting standards?
- PFRS
- Judgment
a) requirements in other PFRS dealing with similar transactions
b) conceptual framework
c) pronouncements by other standard-setting bodies
d) other accounting literatures and industry practices
What is a change in accounting policy and what is the accounting treatment and effect of adjustment?
Change in measurement bases (e.g. FIFO to WAVE)
Treatment:
a) transitional provision (check PFRS)
b) retrospective application
c) prospective if retrospective is impractical
Effect:
Beginning balance of RE if retrospective
What is a change in accounting estimate and what is the accounting treatment and effect of adjustment?
Changes in realization or incurrence of expected inflow or outflow of economic benefits from assets or liabilities (e.g. change in useful life)
Treatment:
Prospective
Effect:
P/L of current and/or future periods
What is a correction of prior and period errors and what is the accounting treatment and effect of adjustment?
Intentional and unintentional misapplication of principles, misinterpretation of facts and mathematical mistakes
Treatment:
a) retrospective restatement
b) prospective if retrospective is impractical
Effect:
Beginning balance of RE if retrospective
Monetary amounts in financial statements that are subject to measurement uncertainty
Accounting estimates
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 ________________.
Accounting Estimate
[Change in accounting estimate or policy?]
Change from FIFO to WAVE
Accounting Policy
When can you change accounting policies?
- required by PFRS
- results to more relevant and reliable information
[Change in accounting estimate or policy?]
Change in method of recognizing revenue from long-term construction contracts
Accounting Policy
[Change in accounting estimate or policy?]
Change of financial reporting framework such as PFRS for SMEs to full PFRS
Accounting Policy
[Change in accounting estimate or policy?]
Initial adoption of revaluation model for PPE and intangible assets
Accounting Policy
[Change in accounting estimate or policy?]
Change from cost model to FV model of measuring investment property
Accounting Policy
[Change in accounting estimate or policy?]
Change in depreciation or amortization methods
Accounting Estimate
[Change in accounting estimate or policy?]
Change in business model for classifying financial assets resulting to reclassification between financial asset categories
Accounting Policy
[Change in accounting estimate or policy?]
Change in useful life of depreciable assets
Accounting Estimate
[Change in accounting estimate or policy?]
Change in residual value of depreciable assets
Accounting Estimate
[Change in accounting estimate or policy?]
Change in required allowances for impairment losses and uncollectible accounts
Accounting Estimate
[Change in accounting estimate or policy?]
Changes in FV less cost to sell on non-current assets held for sale and biological assets
Accounting Estimate
Intentional act involving the use of deception to obtain and unjust or illegal advantage
Fraud
[Change in accounting estimate or policy?]
Changes in currency exchange rates for foreign currency denominated cash and receivables
Accounting Estimate
Unintentional misstatement in FS including omission of an amount of disclosure
Error
