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Wiley IFRS: Practical Implementation Guide and Workbook, 3rd Edition by Liesel Knorr, Graham Holt, Abbas A. Mirza

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Chapter 6
ACCOUNTING POLICIES, CHANGES IN ACCOUNTING ESTIMATES AND ERRORS (IAS 8)

BACKGROUND AND INTRODUCTION

“Comparability” is one of the four qualitative attributes (or characteristics) of financial statements according to the International Accounting Standards Board (IASB) Framework. For users of financial statements, it is important to be able to compare not only the financial statements of an entity from one period to another but also the financial statements of different entities. Such information is needed in order to make relative comparisons of financial performance and financial position and changes in financial position.
IAS 8 prescribes criteria for selecting and changing accounting policies and the disclosures thereof and also sets out the requirements and disclosures for changes in accounting estimates and corrections of errors. In doing so it purports to achieve these objectives:
• To enhance the relevance and reliability of an entity’s financial statements
• To ensure the comparability of the financial statements of an entity over time as well as with financial statements of other entities
DEFINITIONS OF KEY TERMS
(in accordance with IAS 8)
 
Accounting policies. The specific principles, bases, conventions, rules, and practices applied by an entity in preparing and presenting financial statements.
Change in accounting estimate. An adjustment of the carrying amount of an asset or a liability, or the amount of periodic consumption of an asset, that results from ...

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