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Hello tutor, I face some problems with IAS 8 in relation to errors.
IAS 8 states based on BPP text book:
Prior period errors: correct retrospectively. There is no longer any allowed alternative treatment.
This involves:
(a) Either restating the comparative amounts for the prior period(s) in which the error occurred, or
(b) When the error occurred before the earliest prior period presented, restating the opening balances of assets, liabilities and equity for that period, (IAS 8: para. 42)
so that the financial statements are presented as if the error had never occurred.For (a), I understand its meaning, this meaning that, for example, 20X9: Identify errors in 20X5 -> 20X5 must be restated the comparative amounts.
But, for (b), I don’t understand. Can you give me some example for (a) and (b). Thanks tutor a lot !
Normally we report the results for the current and previous year only.
If we are preparing 2021 accounts and there was an error overstating profit in 2018, we would adjust profits brought forward in the SOCIE.
Profits b/f as previously reported xxx
Prior year adjustment (xxx)
Profits b/f as restated xxxYou saw examples in FR and, if in doubt, please revisit our FR lectures.
🙂
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