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IAS 8 – Example (errors) – ACCA Financial Reporting (FR)

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    • For your first question – error is only 500 as we are adjusting the figures from the previous year hence its called brought forward adjustment, the 300k you state of is is an error in the current year which is shown under separate column in SOCE and it is also not part of retained earnings .

      For your second question – 1200 is the retained proft for the year and goes under the retained earnings column and its not under but in the same line as TCI as we want to calculate the total comprehensive income for the years including the revaluation surplus.

      if you still do not understand, I would advise you to get thorough on IAS 16 and SOCE proforma

  4. Question – Example #1 : It says some other property had been revalued by $300,000. If we credit revaluation reserve where do we debit it ? In the answer NCA is arrived as
    2008 – 2000
    Less – (500)
    Add – 800 difference between carrying value of 2008 and 2009
    total – 2300

    No impact of revaluation provided. Please can you help to explain this

  6. why is 500k deducted from the cost of sales and other expenses from 2008, as only depreciated amount related to the non current asset would have been deducted in p&l, then 500k can be deducted from the NCA in SFP.

    Thanks for helping me understand

    • 500,000 is not deducted but added to cost of sales as it is the impairment. (Depreciation and impairment are always added to cost of sales) and yeah 500,000 is deducted from NCA as it is recorded in excess in 2008 and the same thing continues in 2009 as well. So in balance sheet, 500,000 will be deducted from both year’s given amount. Hope this helps.

  7. Please HELP!!

    will we need or be asked to illustrate fin. stat. for prior year as we are doing in the examples? i do not see it relevant but do not want to loose marks… i see it relevant to changes in equity for carrying forward balances or if the prior year required a material adjustment –

    Thank you again…

    • The comparative figures are last year’s published numbers in the financial statements. So if this year is reporting the 2019 results then the comparative figures are for 2018.

  9. Hi Chris,

    Many thanks for your helpful and clear lectures.

    Just I have one enquiry, isn’t that revaluation of $300 should be charged to P&L of 2009 as last year there was impairment recorded in SPL and to the best of my knowledge any revaluation upward take place after previous impairment would be charged to P&L until reverse the initial impairment booked whether under Cost or Revaluation model.

    Regards,

    • Hi,

      Good knowledge of reversal of impairments, however it specifically states in the question that the revaluation in 2009 relates to other items of property and so not the property that had been impaired.

      Thanks

    • Hi Cindy,

      No, the SFP is not necessarily done first as we might need to only adjust the SPL if that is where the error has been made. It all depends on where the initial error has been made as to what needs to be corrected first, so please ensure that you read the questions carefully.

      Thanks

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