According to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, an entity must select and apply its accounting policies consistently from one period to the next and among various items in the financial statements. However, an entity may change its accounting policies under certain conditions.
Required:
Identify the circumstances under which it may be appropriate to change accounting policy in accordance with the guidance given in IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors. (2 marks)
View Solution
Under IAS 8 it is appropriate to change accounting policy in two situations.
- If a new standard or interpretation requires a change form an existing policy, and
- If a different policy would produce financial statements that are more relevant than the existing policy. In other words, the proposed policy would result in financial statements that reflect the financial position and performance of the entity more fairly.