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Hi Chris,
In the example for reporting errors, how can I tell from the notes that the cost of sales in 2009 (-$1,400) in the SPL is already including the new amount of depreciation for the impaired asset?
From the note it says ‘prior to making any adjustments’, so shouldn’t one assume that the depreciation expense in 2009 has not yet been revised (i.e. the depreciation charged is as if the asset was not impaired).Additionally, I see that there was no ‘retained earnings’ in the presentation of the SFP as of 31 Dec 2008, and was ‘wrongly’ reported as ‘reserves’. Is this not an error in presentation? If yes then why wouldn’t we also show this as an error in the SOCE?
Thank you in advance for your guidance.
Regards,
TimHi Tim,
When it says prior to making any adjustments then that is referring to making any adjustments for the error made, everything else is assumed to have been done. therefore all the amounts have been accounted for this year, apart from adjusting for any error/changes.
I’m not sure that I fully pick up your second point though, sorry. I think it is all correct and is referring to the fact that it was expenses as opposed to capitalised, it isn’t a presentation error as it was presented correctly albeit using the wrong accounting treatment.
Thanks,
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