IAS 8 – accounting policies, changes in accounting estimates and errors

Emerald has had a policy of writing off development expenditure to profit or loss as it was
incurred. In preparing its financial statements for the year ended 30 September 2014 it has
become aware that, under IFRS rules, qualifying development expenditure should be treated
as an intangible asset. Below is the qualifying development expenditure for Emerald:
GHS000
Year ended 30 September 2011 300
Year ended 30 September 2012 240
Year ended 30 September 2013 800
Year ended 30 September 2014 400
All capitalised development expenditure is deemed to have a four-year life. Assume
amortisation commences at the beginning of the accounting period following capitalisation.
Emerald had no development expenditure before that for the year ended 30 September 2011.
Required:
Treating the above as the correction of an error in applying an accounting policy, calculate the
amounts which should appear in the statement of profit or loss and statement of financial
position (including one year’s comparative figures), and statement of changes in equity of
Emerald in respect of the development expenditure for the year ended 30 September 2014.
Note: You should ignore taxation.