The change in estimate in the final interim period

Learning objectives

• Determine that a significant change in an estimate reported in an earlier interim period, occurring in the final interim period for which no separate report is published, is disclosed in a note to the annual financial statements.L2, L3
• Calculate the effect of a change in estimate in the final interim period as the difference between the revised annual amount and the previous estimate for the same item, and distinguish it from the expense of the last quarter.L2, L3

Normative references

• IAS 34 §26When an estimate of an amount reported in an earlier interim period of the financial year changes significantly during the final interim period and no separate report is published for that period, the nature and amount of the change are disclosed in a note to the annual financial statements for that financial year.

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

2 questions

• Halden SA (financial year = calendar year) had estimated its annual customer rebates at EUR 500,000 at the start of the year; it recognised {amounts_in_previous_periods} of expense for this in the first three quarters. In the fourth quarter, it revises the annual amount of the rebates to {revised_annual_amount} (case data). It does not publish a separate interim report for the fourth quarter. Calculate the amount to be recognised in the fourth quarter.L3
• In the second quarter, Corvane SA recognised a warranty provision of EUR 300,000. In the fourth quarter, it revises this estimate significantly, to EUR 520,000 (case data); the adjustment is recognised in the fourth quarter. No separate interim report is published for that quarter. What must it do in addition to recognising the adjustment?L2