Wiley International Trends in Financial Reporting under IFRS: Including Comparisons with US GAAP, Chinese GAAP, and Indian GAAP

CHAPTER 5

Accounting Policies, Changes in Accounting Estimates and Errors (IAS 8)

1. OBJECTIVE

1.1 This Standard prescribes the basis for the selection of accounting policies and their amendment. It also prescribes the requirements and disclosures for any changes that are made in accounting estimates and corrections of prior period errors. The other disclosure requirements for accounting policies are set out in International Accounting Standard (IAS) 1, Presentation of Financial Statements.

2. SYNOPSIS OF THE STANDARD

This Standard aims at enhancing the relevance and reliability of an entity’s financial statements and users’ ability to compare the financial statements of an entity over time as well as with the financial statements of other entities. The summary of this Standard follows.

2.1 Accounting policies are the specific principles, bases, conventions, rules and practices that are applied by an entity in preparing and presenting financial statements.

2.1.1 In selecting and applying an accounting policy, the Standard or the Interpretation that applies to the relevant transaction, event, or condition must be applied so that the financial statements will

• Represent faithfully the financial position, financial performance, and cash flows of the entity.
• Reflect the economic substance of transactions, other events, and conditions.
• Be neutral, prudent, and complete in all material respects.

2.1.2 In case the Standards or Interpretations do not address a specific transaction, other ...