Change in policy and restatement

Learning objectives

• Determine, for a change in accounting policy, whether to restate the interim periods of the financial year and the comparative periods in accordance with IAS 8 or, if the cumulative effect at the beginning of the year cannot be determined, to apply the new policy prospectively from the earliest date practicable, the objective being a single policy throughout the year.L2, L3
• Calculate the restated amount of a previous interim period from the reported amount and the effect of the change.L2, L3

Normative references

• IAS 34 §43A change in accounting policy, other than one for which the transition is specified by a new Standard, is reflected by restating the financial statements of prior interim periods of the current financial year and the comparable interim periods of prior financial years that will be restated in the annual financial statements in accordance with IAS 8; if the cumulative effect at the beginning of the financial year cannot be determined, the new policy is applied prospectively from the earliest date practicable.
• IAS 34 §44One objective of the principle in para. 43 is to ensure that a single accounting policy is applied to a particular class of transactions throughout an entire financial year: within the current year, a change in accounting policy is applied retrospectively or, if that is not practicable, prospectively from no later than the beginning of the financial year.

Original summaries of the paragraphs (reference register), never a quotation of the standard.

2 questions

• In the third quarter of 20X5, Cortane SA voluntarily changes its accounting policy for measuring inventories, with effect on the year 20X5 (a change within IAS 8, with no transitional provision of a new standard: case assumption). The reports of the first two quarters were published under the old policy. The cumulative effect at the beginning of the year can be determined (case data). What must Cortane SA do?L2
• Alba SA published a profit of {published_amount} for the first half-year of 20X5. In the third quarter, it voluntarily changes its accounting policy (IAS 8), the cumulative effect at the beginning of the year being determinable (case assumption). Applied to the first half-year, the new policy reduces profit by {policy_change_effect} (case data). Calculate the restated profit of the first half-year to be shown in the third-quarter report.L3