Fundamental Errors, Changes in Accounting Estimates, Changes...

Fundamental Errors

Fundamental Errors - errors that have been opened in the current period, the value of which is so great that the information presented in the financial statements for the previous period (periods) can no longer be considered reliable at the time of reporting.

4.7. When reflecting fundamental errors, the following approaches can be used:

• The main one, in which the amount of correction of a fundamental error should be represented by adjusting the opening balance of retained earnings. Comparative information should be updated if this makes sense;

• Alternative, in which the amount of correction of a fundamental error must be taken into account in calculating the net profit or loss for the current period. Comparative information should be presented in the same way as it was presented in the financial statements of the previous period.

Changes in Accounting Estimates

Accounting Policies - the specific principles, fundamentals, techniques, rules and methods adopted by the company in the preparation and presentation of financial statements.

4.8. Changes in accounting estimates are related to uncertainty in economic activity, as a result of which many articles can not be measured accurately enough, but can only be estimated. If the difference between the change in the accounting policy is difficult to distinguish from the change in the accounting estimate, the latter is preferred. The result of such a change is included in the net profit or loss for the current period or current and future periods if the change affects both periods.

The basic accounting procedure is as follows:

• adjust the balance of accumulated profit at the beginning of the period;

• recalculate comparative indicators of the income statement;

• recalculate other reported comparative figures.

With an alternative accounting order:

• the amount of the adjustment is included in the net profit or loss for the current period;

• comparative figures are not recalculated;

• predictions are presented.

Changes in accounting policy

4.9. Changes in the accounting policy are allowed only in the following cases:

• in accordance with the requirements of the law;

• in accordance with the order of the body setting the standards for financial reporting (that is, with the adoption of IFRS);

• If the changes lead to a better presentation of information.

For basic accounting:

• It is necessary to indicate any transitional provisions for the adoption of the international financial reporting standard;

• Must be applied retrospectively:

- correction of the initial balance of accumulated profit;

- recalculation of comparative indicators.

These procedures should be used prospectively, if the recalculation of indicators for the previous period is impractical.

With an acceptable alternative accounting order:

• the amount of retrospective application of a change in accounting policy is included in the net profit or loss for the current period;

• comparative figures are not recalculated;

• predictions are presented;

• If a retrospective application is impractical, a prospective application is used.

Disclosure

4.10. Articles disclosed separately, within the framework of profit or loss from ordinary activities:

• Character;

• amount before and after taxation.

4.11. The results of extraordinary circumstances:

• Character;

• amount;

• tax effect;

• Minority interest.

4.12. Changes in Accounting Estimates:

• Character;

• amount before and after taxation.

4.13. Basic errors:

• Character;

• the amount of adjustment in the current and previous periods;

• tax effect;

• minority interest;

• The fact that the recalculation of comparative indicators occurred;

• the basis by which comparative figures are not recalculated.

4.14. Changes in Accounting Policies:

• the basis for the changes;

• the amount of the adjustment for the current and previous periods;

• tax effect;

• minority interest;

• the very fact of recalculation of comparative indicators;

• the basis by which the comparative figures are not recalculated.

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