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Sir
a company used to carry PPE at historical cost on its balance sheet, if it switches to fair value valuation method, does this constitute change of accounting policy or change of accounting estimate?
Thank you
from BPP textbook “in the case of tangible NCA, if a policy of revaluation is adopted for the first time then it is treated not as a change in accounting policy under IAS but as revaluation under IAS 16 PPE” I suppose that would mean PPE from HC to FV is a change in accounting policy.
Also sir i would like to know if FV model to cost model change is only applied for investment property to be constituted as change in accounting policy.@gmpo12 said:
Sira company used to carry PPE at historical cost on its balance sheet, if it switches to fair value valuation method, does this constitute change of accounting policy or change of accounting estimate?
Thank you
Hi,
It is not technically a change in accounting policy using IAS 8 (although it sort of is!), and instead it is treated under IAS 16 as a normal revaluation. So there is no requirement to restate the comparatives as in IAS 8.
Thanks
@aarina said:
from BPP textbook “in the case of tangible NCA, if a policy of revaluation is adopted for the first time then it is treated not as a change in accounting policy under IAS but as revaluation under IAS 16 PPE” I suppose that would mean PPE from HC to FV is a change in accounting policy.
Also sir i would like to know if FV model to cost model change is only applied for investment property to be constituted as change in accounting policy.Hi,
A change from FV to cost model would not give a more appropriate/reliable presentation and so is very unlikely to happen.
Thanks
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