IAS-8 Presentation Slide Presented By Team Point Blank.

1. WELCOME
To
Presentation

2. Presented By
Team Point Blank
Name ID
Fatema Tuz Zahara(L) 1766
Shakhawat Hossain 1770
Kajal Mondal 1778
Md. Murad Hasan 1777
Priyonti Roy 1767
Farjana Rahman 1763
Suranjana Zaman 1752
Mehrubin Parash Moumita 1764
Sayada Mahmuda 1748
Israt Jahan Eva 1753
Aka Rani Roy 1749

3. IAS-8 Accounting Policies, Changes in
Accounting Estimates, Errors
1 January 2005
Amended by new
Standards
To prescribe the criteria and accounting treatment ofObjective
Accounting Policies
+ Their Changes
Changes in Accounting
Estimates
Correction of Errors

4. IAS-8
Satisfy Qualitative Characteristics of
 Comparability
 Relevance & Reliability
Accounting Policies
 Relevant IASs are mandatory
 Where no relevant IAS, apply
judgment in line with IAS Framework
 Applied Consistently
Accounting Estimates
 Often change to reflect new
information on e.g.
Recoverability, Useful life
 Prospective Application
Prior Periods Errors
 Omissions and Misstatements that
should not have occurred
 Retrospective Restatements

5. Accounting Policies
 Specific Principles
 Bases
 Conventions
 Rules
 Practices
To Prepare
Financial Statements
Examples: 1. Change from Historical cost to Fair value
2. Classification, presentation and measurement of financial
assets and liabilities

6. Accounting Policies
 How to select accounting policy?
 If there is some standard or interpretation
 When there is NO specific standard or interpretation
The question here is whether there is some IFRS or Interpretation dealing with
your specific transaction or situation, or NOT

7.  When can we change the accounting Policy?
Required by IFRS
New Policy Result in more
Relevant Information
 How can we change the accounting policy?
Transitional Provisions in New IFRS
Retrospectively
Change in Accounting Policies

8. Following are extracts of Antidote LTD’s most recent financial before the application of FIFO
method:
2002 ($ m) 2001 ($ m)
Current Assets:
Cash & Bank
Short Term Investment
Inventory
7
6
11
5
9
13
Total 24 27
2002( $ m) 2001 ($ m)
Cost of sale:
Opening Balance
Purchase
Closing Balance
13
49
(11)
9
45
(13)
Total 51 41
Income Statement for the year ended
31, December 2002 & 2001
Statement of Financial Position
31, December ,2002 & 2001
Facts:
2002($m) 2001($m) 2000($m)
Inventory 11 13 9
Management estimate that the value of its inventory using LIFO method would be as follow:

9. 2002 ($ m) 2001 ($ m)
Retained Earnings:
Opening Balance
Net Profit
Dividend
38
29
(10)
29
19
(10)
Closing Reserve 57 38
Statement of Change in Equity for the year ended 31, December 2002 & 2001
2002 ($ m) 2001 ($ m) 2000 ( $ m)
Inventory 13 14 11
Management Estimate that value of its inventory using FIFO method would be as follow:

10. 2002 ($m) 2001 ($m)
Current Assets:
Cash & Bank
Short Term Investment
Inventory
7
6
13
5
9
14
Total 26 28
Statement of Financial Position
31, December 2002 & 2001
2002 ( $m) 2001 ( $m)
Cost of Sale:
Opening Balance
Purchase
Closing Balance
14
49
(13)
11
45
(14)
Total 50 42
Income Statement for the year ended
31, December 2002 & 2001
Solutions:
2002 ($m) 2001 ($m)
Retained Earnings:
Opening Balance
Net Profit
Dividend
38
30
(10)
30
18
(10)
Closing Reserve 58 38
Statement of Change in Equity for the year ended
31, December 2002 & 2001

11. Disclosure of Change in Accounting
Policies
 Title of Standard
 Nature of the Change
 State that made in accordance with the transitional provisions, if applicable
 Amount of adjustment for current and each prior period presented
 Amount of adjustment related to periods prior to those presented

12. Adjustment of
Carrying Amount
Periodic
Consumption
Not Correction of
Error
Examples
1. Change of the provision amount based on fair value
2. Depreciation method or asset useful life
Change in Accounting Estimates

13. Examples
Bad Debit Provisions Depreciation Repair / Warranty
In the current reporting period
In both current and future reporting periods
Change in Accounting Estimates
 How we can change the accounting estimates?
Unlike accounting for change in accounting policy, we need to change our
accounting estimates Prospectively, either:

14. On January 1, 20X1, Robust Inc. purchased heavy-duty equipment for $400,000. On the date of
installation, it was estimated that the machine has a useful life of 10 years and a residual value of
$40,000.
Accordingly the annual depreciation worked out to $36,000 = [($400,000 – $40,000) / 10].
On January 1, 20X5, after four years of using the equipment, the company decided to review the useful
life of the equipment and its residual value. Technical experts were consulted. According to them, the
remaining useful life of the equipment at January 1, 20X5, was seven years and its residual value was
$46,000.
Required
Compute the revised annual depreciation for the year 20X5 and future years.
Facts:

15. The revised annual depreciation based on the remaining useful life and revised residual value will be
Computed based on this formula:
Revised annual depreciation = (Net book value at January 1, 20X5 – revised residual value) / remaining
useful life
Solutions:
Net book value at January 1, 20X5:
= $400,000 – ($36,000 × 4 years)
= $256,000
Revised annual depreciation for 20X5 and
future years:
= ($256,000 – $46,000) / 7 = $30,000

16.  The nature and amount of a change in an accounting estimate that has an effect
in the current period or is expected to have an effect in future periods
 If the amount of the effect in future periods is not disclosed because estimating
it is impracticable, an entity shall disclose that fact.
Disclosure of Change in Accounting
Estimates
Financial statements of subsequent periods need not repeat these disclosures.

17. Accounting Policies Vs Accounting Estimates
Principles /
Measurement Basis
Amounts /
Patterns
1. Change from historical cost to fair
value
2. Change from LIFO to FIFO Method
1. Change of the provision
amount based on fair value
2. Change in estimated % of loss
allowance
Retrospectively
Prospectively
What is it ?
Examples:
Accounting

18. Errors Related to Prior Reporting
Periods
Errors Related to Current
Reporting Periods
Prior Period Current Period
Errors
Examples: 1. Mistakes in applying accounting policies
2. Fraud

19. Errors
Restate Retrospectively
In the current reporting
period
Comparatives Opening Balance
Is it Material ??

20. Disclosure of Prior Period Errors
Financial statements of subsequent periods need not repeat these disclosures.
 The nature of the prior period error
 For each prior period presented, to the extent practicable, the amount of the
correction
 The amount of the correction at the beginning of the earliest prior period
presented
 If retrospective restatement is impracticable, an explanation and description of how
the error has been corrected.

21. Facts:
Thomas Co. Statement of profit or loss and other comprehensive income extract and summarized
statement of financial position for the year ended 31 December, 2018.
Revenue
Cost of sales and expenses
2500
(1200)
Profit of the year 1300
Non-current Assets
Current Assets
Net Assets
2000
800
2800
Share Capital
Reserves
Current Liabilities
Net Liabilities
600
2000
200
2800
Statement of Financial Position at 31 December 2018

22. During 2019 it was discovered that certain non-current assets had been include in the
records that 31 December , 2018 at $ 5,00,000 in excess of their recoverable amount
and this situation was unlikely to change.
Required:
How will we change the situation in our financial statement which was
created for errors?

23. 2019 2018
Revenue 2,600 2,500
Cost (1400) (1700)
Thomas Co.
Restated Comprehensive
Income Statement
Solutions:
Total 1,200 800
(1,200 + 5,00)
Error

24. Thomas Co.
Restated Financial Statement
2019 2018
Non-current Assets(-500)
Current Assets
Equity Shares
Retained Earnings
Revaluation
Current Liabilities
2,300
1,700
4,000
600
2,700
300
3,600
400
1,500
800
2,300
600
1,500
2,100
200
Total 4,000 2,300
E E

25. Change in Equity Equity Shares Retained Earnings Revaluation Total
B/F (as previously)
Errors
TCI
C/F Financial Position
600
-----
600
-----
600
2000
(500)
1500
1200
2700
-----
-----
300
300
= 2600
= (500)
= 2100
= 1500
3600

26. Thank You
Any Query ?