Skip to main content
IFRS Academy

CERTYNEX IFRS ACADEMY

My account — Professional

Search the Academy

Home
My learning path
Exercises & quizzes
Cases
Workpapers
Exams
My progress

AdvancedAdvanced · Expert

Assessing impracticability

Learning objectives

  • Assess whether restatement is impracticable in the light of the three situations set out in the standard.L3, L4
  • Distinguish information that may be used in retrospect (circumstances that existed and information available when the financial statements were authorised for issue) from the prohibited use of later information.L3, L4
  • Calculate a restatement excluding information obtained with hindsight.L3, L4

Normative references

  • IAS 8 §5Definitions: accounting policies — the specific principles, bases, conventions, rules and practices applied by an entity in preparing and presenting financial statements; accounting estimates — monetary amounts in financial statements that are subject to measurement uncertainty; 'material' — used as defined in IAS 1 (para. 7); prior period errors — omissions from, and misstatements in, the financial statements for one or more prior periods arising from a failure to use, or misuse of, reliable information that was available when those financial statements were authorised for issue and could reasonably be expected to have been obtained and taken into account (mathematical mistakes, mistakes in applying accounting policies, oversights, misinterpretations of facts, fraud); retrospective application — applying a new accounting policy as if that policy had always been applied; retrospective restatement — correcting the recognition, measurement and disclosure of amounts as if the error had never occurred; prospective application — applying a new policy to transactions occurring after the date of the change, and recognising the effect of a change in estimate in the current and future periods affected; impracticable — a requirement the entity cannot apply after making every reasonable effort to do so, which, for a prior period, covers three situations: effects not determinable; assumptions required about what management's intent would have been at the time; significant estimates for which it is impossible to distinguish objectively information that provides evidence of circumstances that existed at that date and that would have been available when the financial statements were authorised for issue.
  • IAS 8 §43A prior period error is corrected by retrospective restatement except to the extent that it is impracticable to determine either the period-specific effects or the cumulative effect of the error.
  • IAS 8 §44When it is impracticable to determine the period-specific effects for one or more prior periods presented, the entity restates the opening balances of assets, liabilities and equity for the earliest period for which retrospective restatement is practicable (which may be the current period).
  • IAS 8 §45When it is impracticable to determine, at the beginning of the current period, the cumulative effect of an error on all prior periods, the entity restates the comparative information to correct the error prospectively from the earliest date practicable.
  • IAS 8When it is impracticable to determine the amount of an error (for example, a mistake in applying an accounting policy) for all prior periods, the entity, in accordance with para. 45, restates the comparative information prospectively from the earliest date practicable; it therefore disregards the portion of the cumulative restatement of assets, liabilities and equity arising before that date.
  • IAS 8 §50It may be impracticable to adjust comparative information for one or more prior periods to achieve comparability with the current period, for example when data were not collected in the prior periods in a way that allows retrospective application and it is impracticable to recreate the information.
  • IAS 8 §51Applying an accounting policy often requires estimates; estimation is inherently subjective and may be developed after the reporting period. It is potentially more difficult in retrospective application or retrospective restatement, because of the longer period of time since the transaction or event occurred; its objective remains the same as for current period estimates: to reflect the circumstances that existed when the transaction or event occurred.
  • IAS 8 §52Retrospective application requires distinguishing information that provides evidence of circumstances that existed at the date concerned and that would have been available when the prior period financial statements were authorised for issue from other information; when that distinction is impossible for significant estimates, retrospective application is impracticable.
  • IAS 8 §53Hindsight is not used when applying a new accounting policy to, or correcting amounts for, a prior period, either in making assumptions about what management's intentions would have been at the time or in estimating the amounts recognised, measured or disclosed.

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

21 questions

Practical cases

Workpapers