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accounting changes and error analysis - Coggle Diagram
accounting changes and error analysis
standards for accounting changes
limit types od changes, standarize reporting and ensure that it is enough information
accounting changes types
changes in accounting policy: change in the choice od ¨specific principles, bases, rules and practices; example initial adoption of new accounitng standards, change in inventory cost flow
change in accounitng estimate adjustment to the carrying amount of an asset or liability of an asset´s periodic consumption. EX change in estimate of service life of an asset or chanfe net realizable value of account receivable
correction of a prior period error: omissio from mistakes in financial statament of prior periods. EX failere to recognize depreciation
accounting policy
aspe: section 1400 to 3870, accounting guidelines, exercise professional judegement
IFRS: IFRS and guidelnes , judement taking into account the conceptual framework
conditions for change policy
change required by GAAP
voluntary change results in reliable and relevant information, diffrent of ealry adoption of new accounting standards
voluntary change among aspe methods
investement in subsidiary companies, expenditures intagibles, defined benefit plan, income taxes, measure equity component
not a change in policy
diffeent in subtance from those previously occurred
did not occur previously or inmaterial
correction of accounting error and change in estimate
careful estimate later prove to be incorrect= change in estimate
estimate calculated incorrectly= error correction
retrospective application
applying a new accounting policy in the accounts
accounting standards
change in accounting policy: apply method approved in the transitional provisions, none use retrospectie application , impracticable apply prospectively
change in accounting policy- voluntary: use retrospectuve application to extened practicable, apply prospectively
change accounting estimate: apply prospectively
correction of an error: use restrospective