Disclosure issues: Changes in Accounting Estimates

Question 1

Para 32 to 35

Answer 1

• Many items in FS cannot be measured with precision, therefore estimation needed
• Estimates may need revision if changes occur in circumstances or new info available
• The revision of estimate does NOT relate to prior periods (=> NOT a correction of error)

Question 2

Para 36-37

Answer 2

• The effect of change in accounting estimate shall be recognised PROSPECTIVELY in P/L in the CURRENT period and any subsequent periods (NB: vs. errors which are recognised retrospectively)
• If change affects asset, liability or equity, then recognised by adjusting the CA in the period