Disclosures on changes in estimates

Learning objectives

• Prepare the disclosure of the nature and amount of a change in accounting estimate, including the expected effect on future periods.L2, L3
• Identify a missing disclosure about a change in accounting estimate.L2, L3

Normative references

• IAS 8 §39The entity discloses the nature and amount of a change in accounting estimate that has an effect in the current period or is expected to have an effect in future periods, except for the effect on future periods when it is impracticable to estimate that effect.
• IAS 8 §40If the amount of the effect on future periods is not disclosed because estimating it is impracticable, the entity discloses that fact.

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

10 questions

• An entity discloses the nature and amount of a change in accounting estimate that has an effect in the current period.L2
• When the future effect of a change in estimate cannot be estimated, the entity has nothing to disclose about it.L2
• Vadorne revises the useful life of its vehicles in 2025. What must it disclose in its notes?L2
• Geuline cannot estimate the effect of a change in estimate on future years, for lack of reliable data. What must it do?L3
• After revising the useful life, the 2025 depreciation of an item of equipment at Faudane rises from 24,000 to 32,000. Which amount is the effect of the change in estimate to be disclosed for 2025?L2
• Following a revision of useful life, the annual depreciation of an asset at Tarnaise rises from {old_depreciation} to {new_depreciation} from 2025; the difference will recur over the following {next_years} years. Compute the effect on 2025 to be disclosed and the expected cumulative effect on those future years.L2
• At 1 January 2025, an item of equipment at Brevaine has a carrying amount of {carrying_amount}. Its remaining useful life, so far estimated at {old_remaining_life} years, is revised to {new_remaining_life} years (straight-line, no residual value). What amount of the effect of the change on 2025 must be disclosed?L3
• In 2025, Selvorne increases its restoration provision from {provision_before} to {provision_after}, following a revision of expected costs. What amount of the change in estimate should be disclosed in the notes?L2
• Zorlane's note on revising the useful life of its machines says: 'Effect on 2025: additional charge of 40,000.' The future effect could be estimated. What is missing?L2
• Grenvale revised the residual value of its aircraft, which reduces 2025 depreciation from 300,000 to 260,000. The note says: 'Change in estimate: depreciation of 260,000.' What is the error?L3