Set 7 FR 30 Changes in accounting

Question 1

How are changes in estimates accounted for?

Answer 1

Prospectively

Question 2

Define change in estimate

Answer 2

A change in estimate is a result of new information that was not available at the statement of financial position date being available at a later date.

Question 3

Disclosures required for change in estimate

Answer 3

• nature and amount that affects current period, or is expected to affect future periods.
• if not possible to estimate effect on future periods, disclose this

Question 4

What are the two conditions under IFRS to allow a policy change? How are these applied?

Answer 4

• effect of change to provide more reliable and relevant information. Applied retrospectively.
• standard requires change. applied consistent with transitional provisions.

Question 5

If voluntary change in policy, how is change handled?

Answer 5

Retrospectively

Question 6

At a minimum, what should be re-stated when doing a voluntary change. Is allowance for impracticality?

Answer 6

it is required that the previous year’s and the beginning balance of the previous year’s statements of financial position be amended to reflect the change. In addition, the previous year’s statement of comprehensive income, statement of changes of equity, and statement of cash flows would also have to be amended to reflect the new accounting policy. Yes, then disclose.

Question 7

If change in policy due to update in GAAP, how is change handled?

Answer 7

As per the transitions in the standard

Question 8

At a minimum, what should be re-stated when doing a voluntary change. Is allowance for impracticality?

Answer 8

it is required that the previous year’s and the beginning balance of the previous year’s statements of financial position be amended to reflect the change. In addition, the previous year’s statement of comprehensive income, statement of changes of equity, and statement of cash flows would also have to be amended to reflect the new accounting policy. Yes, then disclose.

Question 9

How are errors in period period accounted for?

Answer 9

Retrospectively, up to the period where error was made, unless impractical. Then disclose how errors was corrected.

Question 10

Define errors

Answer 10

An error is something that takes place despite the correct info being available at the time.

Question 11

Disclosures for errors

Answer 11

• description of error
• for each prior period presented, the amount of the error and each item impacted
• if retrospective treatment not practical, details of how error was corrected

Question 12

ASPE differences - errors

Answer 12

ASPE requires for errors all asset/liability/equity accounts be restated. No allowance for impracticality.

Question 13

ASPE differences - change in policy

Answer 13

ASPE allows same AS IFRS but also allows:

• consolidation under equity or ASPE 3856
• joint control under cost or equity method
• cap or expense of internally controlled assets under development phase
• measuring DBO for which valuation has happened
• income tax under taxes payable or deferred taxes method
• initially measuring equity of financial instrument that contains both liability and equity as zero.