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IAS & IFRS Standards Overview > IAS 8 > Flashcards

IAS 8 Flashcards

1
Q

Main purpose of IAS 8?

A

Applying accounting policies, changes in estimate, reflecting corrections of prior period errors

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2
Q

What is a change in accounting estimate?

A

Adjustment of carrying amonut of asset or liability or related expense

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3
Q

What is materiality?

A

Info is material if it is expected to influence decisions that primary users of general purpose FSs make

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4
Q

What are prior period errors?

A

Omissions and misstatements in entity’s FSs for one+ prior periods arising from a failure to use reliable info

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5
Q

Examples of accounting estimates?

A

Allowance for doubtful debts

Inventory provisions

Useful lives of non-current assets

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6
Q

Examples of prior period errors?

A

Mathematical mistakes
Applying accounting policies
Oversights
Misinterpretation of facts
Fraud

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7
Q

Disclosures required in IAS 8?

A

Nature of change
Quantify effect of change
Reason for change

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8
Q

What is an accounting estimate?

A

Monetary amounts in FSs that are subject to management uncertainty

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9
Q

What is not accounted for restrospectively?

A

Changes in accounting estimates

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10
Q

Accounting treatment for changes in accounting estimates?

A

Applied prospectively (forward-looking) in SPL (e.g. current period and future periods)

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11
Q

A change in accounting estimate that only affects current period?

A

Irrecoverable debt allowance

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12
Q

A change in accounting estimate that only affects current and future period?

A

Change in life of an asset which is depreciated

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13
Q

Examples of changing estimates?

A

Loss allowance for expected credit losses (IFRS 9)
Net realisable value of inventory (IAS 2)
FV of assets/liabilities (IFRS 13)
Depreciation expense (IAS 16)
Change in warranty provisions (IAS 37)

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14
Q

What are accounting policies

A

Specific principles and practicies applied by entity in preparing/presenting financial statements

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15
Q

In absence of IFRS accounting standard

A

Management uses judgment to develop policy that is relevant and faithfully represents as outlined in Conceptual Framework

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16
Q

Ranking of judgment in developing a policy?

A

IFRS Accounting Standard > Concepital Framework > Other accepted industry practices

17
Q

Key attribute for accounting policies?

A

Consistency across transactions

18
Q

Which events don’t constitute changes in accounting policy

A

Adopting accounting policy for new type of transaction
Adopting a new accounting policy which is not material

19
Q

Accounting treatment for changes in accounting policy?

A

Retrospectively, historical accounting

20
Q

Retrospective change in estimate (Comparative)

A

Restate comparative amounts for each prior period

21
Q

Retrospective change in estimate (Opening balance)

A

Adjusting opening balance of equity for earliest period

22
Q

Retrospective change in estimate (Opening balance)

A

Adjustment to opening equity in SCIE

23
Q

Accounting treatment for prior period errors?

A

Corrects material prior period errors retrospectively in first set of FSs after error discovery found

24
Q

Material prior period error correction (restating)

A

Restating comparative amounts for each prior period where error happens

25
Q

Material prior period error correction (error occured before earliest prior period)

A

Restate opening balance for earliest period presented AND adjustment to opening equity in SCIE

26
Q

Prior-period errors retrospective or prospective?

A

Retrospective

27
Q

Is change in depreciation method from straight line to reduceing balance a change in accounting policy?

A

No, it’s an accounting estimate

28
Q

Is a change in valuation of inventory a change in accounting policy?

A

Yes

29
Q

If thre’s an error

A

Fix in all years

30
Q

A change in presentation for a transaction?

A

A change in account ing policy

31
Q

Accounting policy (retrospective or prospective)

A

Retrospective

32
Q

Accounting estimate (retrospective or prospective)

A

Prospective

33
Q

Accounting policy (measurement)

A

Changes the measurement basis

IAS & IFRS Standards Overview (73 decks)

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