IAS 8Chapter 2Lesson 1
The vocabulary: policy, estimate, error, retrospective, prospective, impracticable
Step 1 of 8Learning objectives
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An accounting policy is a rule the entity applies; an accounting estimate is an uncertain amount that this rule leads to calculate; a prior period error is an omission or misstatement caused by reliable information that was available and was ignored or misused. Depending on the case, one applies retrospectively, restates retrospectively or applies prospectively; "impracticable" refers to what remains impossible after every reasonable effort.
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Learning objectives
- Distinguish accounting policy, accounting estimate and prior period error.
- Explain retrospective application, retrospective restatement, prospective application and impracticability.
- Check the conditions of an error: reliable information, available when the statements were authorised for issue and reasonably obtainable.