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Hi
I was wondering if you could clarify issue of prior period errors and their correction, I am confused as to when we need to adjust only opening retained earnings for current period and when last years figures need to be reinstatedThank you
Change of accounting policy? Go back into history and restate brought forwards as though the new policy had been always adopted.
Fundamental error? Go back into the year when the error occurred, restate that year’s figures and amend subsequent years on the basis of that correction.
Change of accounting estimate? Change the affected figure this year but don’t go back into history.
Better?
Thank you for coming back on this
I am ok with estimate,
in relation to change in policy – I would need only to restate this year’s opening figures of retained earnings only – is that correct?
I am clear on material error, whay would happen in case of non material error?
Thank you
Non- material error? It’s not material – so do nothing because ……. it’s not material!
How can you”only restate this year’s opening figures of retained earnings”????!!!!
How do you expect it to balance if you only adjust one figure?
If, for example, it’s a change of policy that affects TNCA, then you’re going to have to apply the new policy to the existing TNCA from the date the TNCA was acquired. That will change depreciation and therefore carrying values as well as retained earnings
Ok?
This is correct, with change of policy we need to amend this year’s figs but how do we go about prior period? How do we apply policy retrospectively?
Thank you
UNon- material error? It’s not material – so do nothing because ……. it’s not material!
How can you”only restate this year’s opening figures of retained earnings”????!!!!
How do you expect it to balance if you only adjust one figure?
If, for example, it’s a change of policy that affects TNCA, then you’re going to have to apply the new policy to the existing TNCA from the date the TNCA was acquired. That will change depreciation and therefore carrying values as well as retained earnings
Ok?
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