IAS 8Chapter 5Lesson 2
Policy, estimate or error? Classifying a change correctly
Step 1 of 8Learning objectives
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An estimate revised following changed circumstances, new information or more experience is a change in estimate, which does not affect past periods. A change in input or measurement technique is a change in estimate, unless it corrects an error. A change in measurement basis is a change in policy. When in doubt, it is treated as a change in estimate. The outcome of a contingency is not the correction of an error.
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Learning objectives
- Classify a change as a change in policy, a change in estimate or the correction of an error.
- Apply the rule for doubtful cases.
- Measure the difference between prospective treatment and retrospective restatement of the same change.