FAR: 3.3

IFRS difference

A prior-period must be corrected by restatement unless it is impracticable to do so. The indirect effects of a change in accounting policy are not addressed by IFRS.

Change in Accounting Estimate (Prospective Application)

Effects must be accounted for only in the period of change and any future periods affected. The entity must not 1) restate or retrospectively adjust prior-period statements or 2) report pro forma amounts for prior periods

Change in estimate & change in principle

If a change in estimate is inseparable from a change in principle, it is accounted for as a change in estimate

Impracticable to determine CE

If it is impracticable to determine the CE of a new principle on any prior period then the new principle must be applied as if the change had been made prospectively at the earliest date practicable

Retrospective Application

Requires the carrying amounts of 1) assets, 2) liabilities, 3) retained earnings or other components of equity at the beginning of the first period reported to be adjusted for the cumulative effect (CE) of the new principles on the prior period. All periods presented must be individually adjusted for the period-specific effects (PSE) of the new principle.

Error Correction (Restatement)

Result of a mistake or improper application of GAAP. A change from a policy that is not GAAP to a policy that is GAAP is a correction. Error that is discovered in a prior period must be reported as an error correction by restating the prior-period statements. Error corrections must be reported in single-period statements as adjustments of the opening balance of retained earnings. If comparative statemenets are presented, corresponding adjustments must be made to net income and retained earnings for fall periods reported

Change in reporting entity (Retrospective Application)

Results in statements that are effectively those of a different entity. Occurs when 1) consolidated or combined statements replace those of individual entities 2) consolidated statements include different subsidiaries 3) combined statements include different entities. *Does not result from a business combination or consolidation of a variable interest entity. *Change in reporting entity is retrospectively applied to interim and annual statements.

Changes in Accounting Principle (Retrospective Application)

When: 1) an entity adopts a generally accepted principle different from the one previously used 2) changes the method of applying a GAAP 3) changes to a GAAP when the principle previsouly used is no longer GAAP. Retrospective application is required for all direct effected and related income tax effects. Does not include indirect effects