International Financial Reporting Standards_guide.pdf

Chapter 5 Accounting Policies, Changes in Accounting Estimates, and Errors (IAS 8) 51
5.4.5 When a change in accounting policy results from the application of a new standard
or interpretation, any specific transitional provisions in the standard or interpretation should
be followed. If there are no specific transitional provisions, the change in accounting policy
should be applied in the same way as a voluntary change.
5.4.6 A voluntary change in accounting policies is applied as follows:
■ Policies are applied retrospectively and prior periods restated as though the new policy
had always applied, unless it is impracticable to do so.
■ Opening balances are adjusted at the earliest period presented.
■ Policies are applied prospectively if it is impracticable to restate prior periods or to
adjust opening balances.
5.4.7 Carrying amounts of assets, liabilities, or equity should be adjusted when changes in
accounting estimates necessitate a change in assets, liabilities, or equity.
5.4.8 Changes in accounting estimates should be included in profit or loss in the period of
the change or in the period of change and future periods, if the change affects both.
5.4.9 Financial statements do not comply with IFRS if they contain prior-period material
errors. In the first set of financial statements authorized for issue after the discovery of a
material error, an entity should correct material prior-period errors retrospectively by:
■ restating the comparative amounts for the prior period(s) presented in which the error
occurred; or
■ if the error occurred before the earliest prior period presented, restating the opening
balances of assets, liabilities, and equity for the earliest prior period presented.
5.5 PRESENTATION AND DISCLOSURE
5.5.1 If an entity makes a voluntary change in accounting policies, it should disclose:
■ the nature of the change;
■ the reason or reasons why the new policy provides reliable and more relevant
information;
■ the adjustment in the current and each prior period presented and the line items
affected;
■ the adjustment to the basic and diluted earnings per share in current and prior periods;
■ the adjustments to periods prior to those presented; and
■ if retrospective application is impracticable, the circumstances that led to the existence
of that condition and a description of how and from when the change in accounting
policy has been applied.
5.5.2 When initial application of a standard or an interpretation has or could have an effect
on the current period or any prior period, unless it is impracticable to determine the amount
of the adjustment, an entity should disclose:
■ the title of the standard or interpretation;
■ that the change in accounting policy is made in accordance with the standard or interpretation’s
transitional provisions (when applicable);
■ the nature of the change in accounting policy;
■ a description of the transitional provisions (when applicable);
■ the transitional provisions that might have an effect on future periods (when applicable);