Hi sir,
Would you please elaborate on why change in accounting policies are accounted retrospectively but the estimates are treated prospectively, is there any logic behind it?
Thanks!
Ask the Tutor ACCA FR
IAS - 08
Hi,
Yes, the estimate is a judgement and so if ne evidence comes to light that updates the judgement then this only will impact what we know now and into the future, hence done prospectively.
If it is a change in policy then this will continue for the foreseeable future and we need to be able to compare this to the past. To ensure an accurate comparison then we adjust what has been previously reported as we should have help it using this amount from the start.
Thanks
Thank you sir!
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