Unit 04 : Standards Related to
Financial Statements
Accounting standardscoveredunder thisunitinclude
Accountingpolicies errors andestimates
Eventsafterthereportingperiod
Earningspershare
IAS08 AccountingPolicies Errors Estimates
Accounting Policies Accountingpolicies are specificprinciples bases conventions rut
practicesapplied
byan entity in preparing presenting financialstatements The
accountingpoliciesselected bytheentityshouldensurethe information is
relevant tousers
fromretrospectiveapplication reliable freefrombias
transitionalp rovisions
aspectsExemptions
substantiallyd ifferent
immaterial prudent
impractical
complete in allmaterial
representsfaithfully financialposition performance cash
flowsof an entity
change in Accounting policies a change in accounting policies is permittedonly if
it isrequiredbyIFRS
forchangesinaccountingp oliciesthe m ustbe
following
recognitionpresentation measurementbasis
leadsto truer fairerviewoffinancialstatements
a
yes
changes in accountingpolicies are to beaccounted for retrospectively Opening
balance as wellas comparativefiguresare alladjusted
AccountingEstimates it is a methodbywhich an entityarrives at thevalueof
certainamounts in preparationof financial statements Manyfiguresrequireestimat
or judgement based on latest information andmayhaveto berevised Examples a
FVofassets warranty usefullifeofassets etc
Changesin AccountingEstimates estimatesshouldbe
anychanges in accounting
applied prospectively in thesubsequent periods
, AccountingErrors omissionsfrom mintatements in an entity'sfinancialstatements
forone ormorepriorperiodsarisingfromfailuretouse or misuse available information
in preparation offinancial statements Examples are mathematicalerrors mistake in
applyingpolicies fraud misinterpretation oversight
Material
ErrorsCurrent
period Priorp eriod
errors
errorsvshould
be corrected becorrectedretrospectively
beforefinancialissuedshould
correctingopening balances unlessimpracticalto
by doso
statementsare comparativefigures
IAS10 EventsaftertheReportingPeriod
These are eventsbothfavourable unfavourable thatoccurbetweenthereportingdateand
thedateonwhichfinancial statements are authorisedforissue Therearetwotypesofevents
afterthereportingperiod
adjustingevents
nonadjusting
eventsAdjusting
ofEvents evidence conditions thatexisted attheend
ofthereportingperiod itinclude
shouldbe
statements saleofinventoryatreportingdate evidence
ofNRVat reportingdate
offraudorerrors
discovery
datefinancial ofcustomerafterreportingdate
bankruptcy
adjusted.Non asseti mpairedatreportingdate
settlement
ofcourtcaseafterreporting
AdjustingEvents givesevidenceofconditions thatdidnotexistatthereporting date It
combinationif
includes
major business
material disclosein
NTAnatureof evente to plan discontinueoperations or restructuring
offinancial
estimate
effect
Financial Statements
Accounting standardscoveredunder thisunitinclude
Accountingpolicies errors andestimates
Eventsafterthereportingperiod
Earningspershare
IAS08 AccountingPolicies Errors Estimates
Accounting Policies Accountingpolicies are specificprinciples bases conventions rut
practicesapplied
byan entity in preparing presenting financialstatements The
accountingpoliciesselected bytheentityshouldensurethe information is
relevant tousers
fromretrospectiveapplication reliable freefrombias
transitionalp rovisions
aspectsExemptions
substantiallyd ifferent
immaterial prudent
impractical
complete in allmaterial
representsfaithfully financialposition performance cash
flowsof an entity
change in Accounting policies a change in accounting policies is permittedonly if
it isrequiredbyIFRS
forchangesinaccountingp oliciesthe m ustbe
following
recognitionpresentation measurementbasis
leadsto truer fairerviewoffinancialstatements
a
yes
changes in accountingpolicies are to beaccounted for retrospectively Opening
balance as wellas comparativefiguresare alladjusted
AccountingEstimates it is a methodbywhich an entityarrives at thevalueof
certainamounts in preparationof financial statements Manyfiguresrequireestimat
or judgement based on latest information andmayhaveto berevised Examples a
FVofassets warranty usefullifeofassets etc
Changesin AccountingEstimates estimatesshouldbe
anychanges in accounting
applied prospectively in thesubsequent periods
, AccountingErrors omissionsfrom mintatements in an entity'sfinancialstatements
forone ormorepriorperiodsarisingfromfailuretouse or misuse available information
in preparation offinancial statements Examples are mathematicalerrors mistake in
applyingpolicies fraud misinterpretation oversight
Material
ErrorsCurrent
period Priorp eriod
errors
errorsvshould
be corrected becorrectedretrospectively
beforefinancialissuedshould
correctingopening balances unlessimpracticalto
by doso
statementsare comparativefigures
IAS10 EventsaftertheReportingPeriod
These are eventsbothfavourable unfavourable thatoccurbetweenthereportingdateand
thedateonwhichfinancial statements are authorisedforissue Therearetwotypesofevents
afterthereportingperiod
adjustingevents
nonadjusting
eventsAdjusting
ofEvents evidence conditions thatexisted attheend
ofthereportingperiod itinclude
shouldbe
statements saleofinventoryatreportingdate evidence
ofNRVat reportingdate
offraudorerrors
discovery
datefinancial ofcustomerafterreportingdate
bankruptcy
adjusted.Non asseti mpairedatreportingdate
settlement
ofcourtcaseafterreporting
AdjustingEvents givesevidenceofconditions thatdidnotexistatthereporting date It
combinationif
includes
major business
material disclosein
NTAnatureof evente to plan discontinueoperations or restructuring
offinancial
estimate
effect
