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Hi mike
Can I ask a quick question in relation to the example on page 23.When correcting the retained earnings in the prior year, the correction was not made on the statement of profit and loss but rather in the “total comprehensive income part” at the bottom of it. In fact for both years the normal part of the statement of profit and loss is unchanged. Are correction of prior period errors always adjusted in the total comprehensive income part (the bottom bit)?
Cheers
Hugh
That’s a good question!
Yes, I suppose they are. The real affect is within the statement of changes in equity that will start with the retained earrings brought forward, as previously stated. This will be followed by the correction and will give a revise statement of retained earnings brought forward
I suppose that that correction will appear within the comprehensive income section of the statement of profit or loss as well as within the statement of changes in equity
Is that ok?
Thanks Mike that makes sense. Just so my understanding is complete, had the reduction in value been recognised “in time” ie before the previous years statements were drawn up they would have been a simple expense on the profit and loss account, reason being there was no (evident) revaluation surplus to reverse for this asset?
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