IAS 8 ACCOUNTING POLICIES, CHANGES IN ACCOUNTING ESTIMATES, AND ERRORS
IAS 8 establishes rules with regard to (a) the selection and change of accounting policies, (b) changes in accounting estimates, and (c) corrections of prior period errors (IAS 8.1).
Accounting policies are the specific principles, bases, rules, conventions, and practices applied in preparing and presenting financial statements.
A change in accounting estimate is an adjustment of the carrying amount of an asset or a liability or the amount of the periodic consumption of an asset that results from new information or new developments.
Prior period errors are omissions from and misstatements in an entity's financial statements for one or more prior periods arising from a failure to use or the misuse of reliable information that was available or obtainable when financial statements for those periods were authorized for issue. Such errors include the effects of mistakes in applying accounting policies, oversights or misinterpretations of facts, mathematical mistakes, and fraud.
Changes in accounting policies and corrections of prior period errors are generally effected retrospectively, i.e. as if the new policy had always been applied or as if the prior period error had never occurred.
Accounting estimates are changed prospectively, i.e. by recognizing the effect of the change in the statements of comprehensive income of the current and future periods.
2 ACCOUNTING POLICIES
2.1 Selection and Application ...