IAS 2,8_Conceptual Framework

According to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, how should a material error in the previous financial reporting period be accounted for in the current period?

• By making an adjustment in the financial statements of the current period through the statement of profit or loss, and disclosing the nature of the error in a note.

• By making an adjustment in the financial statements of the current period as a movement on reserves, and disclosing the nature of the error in a note.

• By restating the comparative amounts for the previous period at their correct value, and disclosing the nature of the error in a note.

• By restating the comparative amounts for the previous period at their correct value, but without the requirement for a disclosure of the nature of the error in a note.

Which of these changes would be classified as ‘a change in accounting policy’ as determined by IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors?

• Increased the allowance for irrecoverable receivables from 5% to 10% of outstanding debts

• Changed the method of valuing inventory from FIFO to average cost

• Changed the depreciation of plant and equipment from straight line depreciation to reducing balance depreciation

• Changed the useful life of motor vehicles from six years to four years

In which TWO of the following situations can a change in accounting policy be made by an entity?

• If the change is required by an IFRS Standard

• If the entity thinks that a new accounting policy would be easier to report

• If a new accounting policy would show more favorable results

• If a new accounting policy results in more reliable and relevant presentation of events or transactions

According to the International Accounting Standards Board's Conceptual Framework for Financial Reporting which of the measurement bases below can be used by an entity for measuring assets and liabilities shown in its statement of financial position?

• Historical cost Can be used

• Historical cost Cannot be used

• Present value Can be used

• Present value Cannot be used

• Realisable value Can be used