BUSINESS ADMINISTRATION
BUSINESS POLICY
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
I only
|
|
|
II only
|
|
|
I or II
|
|
|
I and II
|
Detailed explanation-1: -An entity shall change an accounting policy only if the change: (a) is required by an IFRS; or (b) results in the financial statements providing reliable and more relevant information about the effects of transactions, other events or conditions on the entity’s financial position, financial performance or cash flows.
Detailed explanation-2: -Changes in an accounting policy are applied retrospectively unless this is impracticable or unless another IFRS Standard sets specific transitional provisions. Changes in accounting estimates result from new information or new developments and, accordingly, are not corrections of errors.
Detailed explanation-3: -Solution: B A change in the method of inventory valuation would be classified as a change in accounting policy under IAS 8. The allowance for doubtful debts, change in useful life and depreciation methods are all accounting estimates.
Detailed explanation-4: -Retrospective application is applying a new accounting policy to transactions, other events, and conditions as if that policy had always been applied.