Change in Accounting Policy

From the earliest period practicable

from what period should prospective application be applied?

1. Req. of current standards dealing with similar matters 2. Definition, recognition criteria, and measurement concepts for assets, liabs, income and expenses in the Conceptual Framework for Financial Reporting 3. Most recent pronouncements of other standard-setting bodies that use a similar framework, other acctng literature and accepted industry practices

hierarchy of guidanxe which management may use when selecting accounting policies in such circumstances

Retrospectively or retroactively

how is a change in accounting policy required by a standard or interpretation applied if no transitional provisions are provided?

In accordance with the TRANSITIONAL PROVISIONS therein

how is a change in accounting policy required by a standard or interpretation applied?

Retrospectively or retroactively

how is a voluntary change in accounting policy applied?

1. Was available when FS for those periods were authorized for issue 2. Could reasonably be expected to have been obtained and taken into account in the preparation and presentation of those FS

reliable info mentioned in prior period errors are those that:

Change in reportig entity

a change whereby entities change their nature and report their operations in such a way that the FS are in effect thos of a different reporting entity

Retrospective application

applying of a new accounting policy to transactions, other events and conditions as if that policy has always been applied

Change in accounting policy

arises when an entity adopts a gaap which is different from the one previously used by the entity

1. Nature of PPError 2. The amount of correction for each PP presented, to the extent practicable - for each FS line item affected - for basic and dilluted eps 3. Amount of correction at the beginning of the earliest PP presented 4. If retrospective restatement is impracticable for a particular prior period, the circumstances that led to the existence of that condition and a description of how and from when the error has been corrected

disclosures of prior period errors

FS of the prior period presented shall be restated to conform with the new accounting policy

effect of change if comparative information is presented

An adjustment to the opening balance of RE

in retrospective application, any resulting adjustment from the change in accounting policy shall be reported as?

1. Its effects are NOT determinable. 2. It requires assumptions about what management's intention would have been at that time. 3. It requires significant estimate, and it is impossible to distinguish objectively info about the estimate that: - provides evidence of circumstances that existed at that time and - would have been available at that time

limitations of retrospective application; or when retrospective application is impracticable

Retrospective restatement

means correcting the recognition, measurement and disclosure of amounts of elements of FS as if prior period had never occured

Prospective application

means that the new accounting policy is applied to events and transactions occuring after the date at which the policy is changed

Prior period errors

omissions and misstatements in the FS for one or more periods arising from a failure to use or misuse of certain reliable info

1. Mathematical mistakes 2. Mistakes in applying accounting policies 3. Misinterpretation of facts 4. Fraud 5. Oversight

possible causes of errors

The beginning of the year of change

the amount of adjustment is determined as of?

Accounting policies

the specific principles, bases, conventions, rules and practices applied by an entity in preparing and presenting FS; must be clearly stated

Judgement

used in the absence of an accounting standard that specifically applies to a transaction or event, in selecting and applying an accounting policy that results in info that is RELEVANT to the economic decision making need of users, and FAITHFULLY REPRESENTED

1. Application of an accounting policy for events or transactions that DIFFER IN SUBSTANCE from previously occurring events or transactions 2. Application of a new accounting policy for events or transactions which did NOT OCCUR previously or that wete immaterial

what are not considered as changes in accounting policy

Restated

what is done to the FS of all prior periods when there is a new reporting entity or there is a change in reporting entity?

Retrospectively, by adjusting the opening balances of RE and affected assets and liabilities

when and how are prior period errors corrected?

1. Required by an accounting standard or an interpretation of a standard 2. Change will result in more relevant and faithfully represented info about the financial position, performance, and cash flows of of the entity

when should a change in accounting policy be made?