BACHELOR OF BUSINESS ADMINISTRATION

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: -Changing an accounting policy is permitted even if it is impracticable to apply the policy prospectively for any prior period. Paragraphs 50–53 provide guidance on when it is impracticable to apply a new accounting policy to one or more prior periods.

Detailed explanation-3: -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-4: -The reporting entity could also change due to a merger or a breakup of a company. Accounting changes require full disclosure in the footnotes of the financial statements to describe the justification and financial effects of the change.

Detailed explanation-5: -Which one of these changes would be classified as a ‘change in accounting policy’ as determined by IAS 8? Solution: B A change in the method of inventory valuation would be classified as a change in accounting policy under IAS 8.