MAA363 Lecture Notes - Lecture 10: Book Value, Financial Statement
Document Summary
Aasb(cid:1005)(cid:1004)8 pres(cid:272)ri(cid:271)es the (cid:272)riteria for sele(cid:272)ti(cid:374)g a(cid:374)d (cid:272)ha(cid:374)gi(cid:374)g a(cid:272)(cid:272)ou(cid:374)ti(cid:374)g poli(cid:272)ies. It"s i(cid:374)te(cid:374)ded to enhance the relevance, comparability and reliability of financial statements. Changes in accounting estimates: the use of estimates is an essential part of the statements and does(cid:374)"t u(cid:374)der(cid:373)i(cid:374)e relia(cid:271)ility e. g. (cid:271)ad de(cid:271)t, useful life, warra(cid:374)ty o(cid:271)ligatio(cid:374) esti(cid:373)ates et(cid:272). Esti(cid:373)ates need revision of circumstances change or new information or experience is obtained. If the change in the estimate effects the current period: only recognise in the period of change e. g. bad debts, warranty provisions, inventory obsolescence etc. If the change effects both current and future periods: recognise in period of change and future periods e. g. changes in estimates of assets useful life, depreciation methods etc. If the amount of the effect of future periods is not disclosed because estimating it is impartible, the entity shall disclose the fact. Example 1: change in accounting estimate of the useful life of an asset:
