ICAEW AF · Chapter 7 · Question 12 of 12
During the current year, a company discovers a material error in the financial statements of the previous year. How does IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors require the error to be dealt with?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Retrospectively, by restating the comparative amounts for the prior period presented
Explanation
IAS 8 requires material prior period errors to be corrected retrospectively in the first set of financial statements authorised after their discovery. Comparative amounts for the prior period are restated, and if the error occurred before that period, the opening balances of the earliest period presented are restated. The correction is not passed through current year profit or loss.
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