MFRS 108 refers to Accounting Policies, Changes in Accounting Estimates and Errors.

(a) Identify which each of the following situations is a change of accounting policy under MFRS108 Accounting Policies, Changes in Accounting Estimates and Errors.

i. Classifying commission earned as revenue in the statement of profit or loss, having previously classified it as other operating income.

ii. Switching to purchasing plant using finance leases from a previous policy of purchasing plant for cash.

iii. Changing the value of a subsidiary’s inventory in line with the group policy for inventory valuation when preparing the consolidated financial statements.

iv. Adjusting the financial statements of a subsidiary prior to consolidation as its accounting policies differ from those of its parent.

v. A change in reporting depreciation charges as cost of sales rather than as administrative expenses.

(b) Explain how materials errors of prior periods are corrected after the errors have been discovered.

Answer rating: 100% (QA)

Ans a i Classifying commission earned as revenue in the statement of profit or loss having previousl... View the full answer