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Wiley IFRS 2014: Interpretation and Application of International Financial Reporting Standards by Brandon Hanekom, Blaise Colyvas, Raymond Chamboko, Edwin Selbst, Tapiwa Njikizana, Danie Coetsee, Bruce Mackenzie

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Chapter 7ACCOUNTING POLICIES, CHANGES IN ACCOUNTING ESTIMATES, AND ERRORS

  1. INTRODUCTION
  2. SCOPE
  3. DEFINITIONS OF TERMS
  4. IMPORTANCE OF COMPARABILITY AND CONSISTENCY IN FINANCIAL REPORTING
  5. ACCOUNTING POLICY
    1. Selecting Accounting Policies
  6. CHANGES IN ACCOUNTING POLICIES
    1. Applying changes in accounting policies
    2. Retrospective application
    3. Impracticability exception
    4. Changes in amortization method
  7. CHANGES IN ACCOUNTING ESTIMATES
  8. CORRECTION OF ERRORS
    1. Impracticability exception
  9. US GAAP COMPARISON

INTRODUCTION

It is self-evident that a true picture of an entity's performance only emerges after a series of fiscal periods' results have been reported and reviewed. The information set forth in an entity's financial statements over a period of years must, accordingly, be comparable if it is to be of value to users of those statements. Users of financial statements usually seek to identify trends in the entity's financial position, performance, and cash flows by studying and analyzing the information contained in those statements. Thus it is imperative that, to the maximum extent possible, the same accounting policies be applied from year to year in the preparation of financial statements, and that any necessary departures from this rule be clearly disclosed. This fundamental theorem explains why IFRS requires restatement of prior periods' financial statements for corrections of accounting errors and retrospective application of new accounting principles.

Financial statements are impacted by the ...

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