- August 21, 2021 at 5:53 pm #632449shaunak22Participant
- Topics: 218
- Replies: 41
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
A 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.
B 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.
C By restating the comparative amounts for the previous period at their correct value,
and disclosing the nature of the error in a note.
D 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.
THE ANS IS C
DOUBTS- in the text they have stated that prior period erros should be accounted for as follows-
? Restating current period figures as if the error never happened correcting those errors
? Restating comparative figures as if error never occurred
so would’t C be wrong since disclosing the error by note means that we are showing the error has occured but in the text they have shown that the restate if as if the error never happend?
so could you please explain how errors are accounted for?
thanks in advanceAugust 29, 2021 at 10:59 am #633347P2-D2Keymaster
- Topics: 4
- Replies: 6473
If an error is made in the prior period and only discovered in the current year then we need to correct that error in the period to which it relates. This would therefore mean updating the comparatives so that they are now correct but we would also need a narrative note to help the users of the accounts understand the error and its impact on the accounts. Without the note the users would not know why the figures from last year are now different to what was reported in the prior year.
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