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PAS 8 Summary Notes

The document discusses changes in accounting policies, estimates, and prior period errors under Philippine Accounting Standards. It notes that an entity can change its accounting policy if required by a standard, to provide more reliable information, or if a standard does not specify transitional provisions. Changes in estimates are applied prospectively and recognized in the current period. Prior period errors must be corrected retrospectively with restatement of comparative prior period amounts and opening balances.

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54 views1 page

PAS 8 Summary Notes

The document discusses changes in accounting policies, estimates, and prior period errors under Philippine Accounting Standards. It notes that an entity can change its accounting policy if required by a standard, to provide more reliable information, or if a standard does not specify transitional provisions. Changes in estimates are applied prospectively and recognized in the current period. Prior period errors must be corrected retrospectively with restatement of comparative prior period amounts and opening balances.

Uploaded by

dara
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Lexine Dara E.

Comia Accy1a

Unit III: PAS 08

I. Changes in Accounting Policies


A. Entity is authorized to change its accounting policy if required by a standard.
1. It must be applied consistently.
2. It must be applied in accordance with the transitional provisions.
3. It must disclose information like the standard causing the change, description of
the transitional provisions, nature of the change, etc.
B. A change in accounting policy must be applied retrospectively if a standard does not
have transitional provisions.
1. The resulting adjustments of the change must be recorded as an adjustment to
the opening balance of each affected component of equity.
2. If it is nonviable, an explanation of how the change in accounting policy is applied
must be disclosed.
C. Entity is allowed to change its accounting policy if it aggregates more reliable and
relevant information in the financial statement.
1. It must disclose its reason why a new policy is much more reliable.

II. Changes in Accounting Estimates


A. The effect of changing an accounting estimate shall be recognised currently and
prospectively.
1. It must be included in profit or loss in the period of the change if it only affects
that period only.
2. It must be included in profit or loss in the period of the change and future periods
if it affects both.
B. Changes in estimates are used as a result of uncertainties in business transactions.
1. It is required if most items in the financial statements cannot be measured with
precision.
2. The change is applied to business transactions from the date of change in
estimate.
3. Take notice that procedure in the changes of estimates does not correct past
depreciation.
C. Disclosures relating to the changes in accounting estimates.
1. It must disclose its nature and its amount that can affect the present and future
period.

III. Prior Period Errors


A. An entity is required to correct all material prior period errors retrospectively.
1. It must restate the comparative amounts for the prior periods shown in which the
error has occurred.
2. It must restate the opening balances of assets, liabilities, and equities if the error
has occurred before the earliest prior period presented.

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