Accounting Policies, Changes in Accounting Estimate and Errors (PAS 8)
I.
II.
III.
Objective
 To provide the criteria for selecting, applying and changing
accounting policies and disclosure.
Scope
 Applied in selecting and applying accounting policies, and
accounting for changes in accounting policies, changes in accounting
estimates and corrections of prior period errors.
Accounting Policies
 Are the specific principles, bases, conventions, rules and practices
applied by an entity in preparing and presenting financial statements.
A. Change in Accounting Policy
 Usually results from a change in measurement basis.
Accounting Treatment
a) Transitional Provision
b) Retrospective application
c) If (b) is impracticable, prospective application
Effect of Adjustment
 On the beginning balance of retained earnings, if accounted for
retrospectively.
Disclosures relating to changes in accounting policies
 the title of the standard or interpretation causing the change
 the nature of the change in accounting policy
B. Changes in Accounting Estimate
 Changes in the realization (or incurrence) of expected inflow (or
outflow) of economic benefits from assets (or liabilities).
Accounting Treatment
a) Prospective application
Effect of Adjustment
 In profit or loss of current period or current and future periods, if
the change affects both.
Disclosures relating to changes in accounting estimates
 effect in the current period or is expected to have an effect in
future periods
 if the amount of the effect in future periods is not disclosed
because estimating it is impracticable, an entity shall disclose
that fact.
C. Errors
 Misapplication of principles, oversight or misinterpretation of
facts, and mathematical mistakes.
Accounting Treatment
a) Retrospective restatement
b) If (b) is impracticable, prospective application
Effect of Adjustment
 On the beginning balance of retained earnings, if accounted for
retrospectively.
Disclosures relating to prior period errors
 the nature of the prior period error
 the amount of the correction at the beginning of the earliest prior
period presented
Events After the Reporting Period (PAS 10)
I.
Objective
 To provide guidance for the accounting treatment of the events, which
take place after the reporting period.
II.
Scope
 Applicable to account for Events after Reporting Period and related
disclosures.
III.
Events after the Reporting Period
 These are classified into two categories as:
1) Adjusting Events - provide additional/further evidence related
to the conditions which existed at reporting date.
Application Examples:
 Bankruptcy of a customer which occurs after the
reporting period.
 Reduction in Net realizable Value of Inventory after the
reporting date
 The receipt of information after the reporting date
 The determination of purchase/selling price of an asset
after the reporting date
 The settlement of a court case after the reporting date
 The discovery of a fraud, or any error after the reporting
date.
2) Non-adjusting Events - indicative of the conditions which
arose after the reporting date
Application Examples:
 Business combination after the reporting period
 Plan to discontinue an operations
 Fall in value of investment after the reporting date
 Dividend declared after the reporting date
 The commencement of a court case due to the events
which take place after the reporting date
 Any changes in the tax rates/laws after the reporting date
 Any loss which arises after the reporting date
IV.
V.
Going Concern

PAS 10 prohibits the preparation of financial statements on a
going concern basis if management determines after the
reporting period either that it intends to liquidate the entity or
to cease trading.
Disclosures
 The date of authorization of financial statements and
related authority.
 For Non-adjusting events the entity should disclose
 The nature of such event and
 Its financial impact
Property, Plant and Equipment (PAS 16)
I.
II.
III.
IV.
V.
VI.
VII.
VIII.
IX.
Objective
 To provide the accounting treatment for property, plant, and
equipment.
Scope
 Applied in selecting and applying accounting policies, and
accounting for changes in accounting policies, changes in
accounting estimates and corrections of prior period errors.
Property, Plant and Equipment
 Are tangible assets that are held for use in production and are
expected to be used during more than one period.
 Examples of property, plant and equipment
a) Land and Land Improvements
b) Building and Office Equipment
c) Machinery and Tools
d) Furniture and Fixtures
e) Patterns, molds and dies
Recognition of property, plant and equipment
 Items of property, plant, and equipment should be recognized as
assets when:
a) It is probable that the future economic benefits associated
with the asset will flow to the entity.
b) The cost of the asset can be measured reliably.
Initial Measurement
 An item of property, plant and equipment should initially be
recorded at cost.
 Cost includes all costs necessary to bring the asset to working
condition for its intended use.
 Measurement subsequent to initial recognition
 Cost model. Asset is carried at cost less
accumulated depreciation and impairment.
 Revaluation model. Asset is carried at a
revalued carrying amount.
Depreciation (cost and revaluation models)
 Allocated on a systematic basis over the asset's useful life.
 Residual value and the useful life of an asset should be reviewed at
least at each financial year-end.
 Depreciation should be charged to profit or loss
 Depreciation begins when the asset is available for use and
continues until the asset is derecognised, even if it is idle.
Recoverability of the carrying amount
 An item of property, plant, or equipment shall not be carried at more
than recoverable amount.
 Recoverable amount is the higher of an asset's fair value less costs
to sell and its value in use.
Derecognition (retirements and disposals)
 An asset should be removed from the statement of financial
position on disposal.
 The gain or loss from the derecognition shall be included in profit or
loss.
Revalued property, plant and equipment
 the effective date of the revaluation
 whether an independent value was involved
 the carrying amount that would have been recognised had the
assets been carried under the cost model