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INCOME
STATEMENT
IAS 1, IAS 8 and IFRS 5
August 16, 2016

QUIZ ANSWERS
1) Verifiability/Comparability/Understandability/Timeliness
2) Purpose:

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QUIZ ANSWERS
3 6)

7 8) Consistency is the method to achieve comparability (goal). Consistency is having the same
processes and method applied to same items. Comparability is being able to compare the
information to information of other companies or information within the same company but in
different periods.

9) Financial/Physical

10) 2010

IAS 1
Presentation of Financial Statements

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IAS 1: OCI Items

Items that of OCI Definitions, P7
- Changes in revaluation surplus (IAS 18 and IAS 38)
- Remeasurements of defined benefit plans (IAS 19)
- Foreign exchange translation gain/loss from a foreign operation (IAS 21)
- Gains and losses from FVOCI financial assets/investment in equity instruments(IFRS 9)
- Effective portion of gains and losses on hedging instruments in a cash flow hedge and
gains and losses on hedging instruments that hedge investments in equity instruments
measured at fair value through OCI (IFRS 9)
- Amount of change in fair value attributable to credit risk for particular liabilities
designated as FVPL (IFRS 9)
- Changes in the value of options related to time value when only the changes in
intrinsic value is designated as hedging instrument (IFRS 9)
- Changes in the value of forwards related to the forward element when only the
changes in spot element is designated as hedging instrument, and changes in the
value of the foreign currency basis spread of a financial instrument when excluding it
from the designation of that financial instrument as the hedging instrument (IFRS 9

IAS 1: OCI Items

Items that can be reclassified to P&L P82, 95
- Disposal of a foreign operation
- Cash flow hedge
- Fair value gains/loss from FVOCI reclassified to FVPL

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IFRS 5
Non-current Assets Held for Sale and
Discontinued Operations

IFRS 5: Definitions
COMPONENT OF Comprises operations and cash flows that can be
clearly distinguished, operationally and for financial

AN ENTITY reporting purposes, from the rest of the entity

Component of an entity that either has been disposed

of, or is classified as held for sale, and
DISCONTINUED (a) Represents a separate major line of business or
geographical area of operations
(b) Is part of a single co-ordinated plan to dispose of a
OPERATIONS separate major line of business or geographical
area of operations or
(c) A subsidiary acquired exclusively with a view to
resale

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IAS 5: Disclosures
Disclosures
Single amount in the statement of comprehensive income comprising the total of:
a) Post-tax profit or loss of the discontinued operations
b) Post-tax gain or loss recognized on the measurement to fair value less cost to sell
or on the disposal of the assets or disposal group(s) constituting the discontinued
operation
Analysis of profit or loss and gain or loss from discontinued operations separately
indicating the related income tax expense*
net cash flows attributable to the operating, investing and financing activities of the
discontinued operations*
Amount of income from continuing and discontinued operations attributable to
owners of the parent

*not required for disposal groups that are newly acquired subsidiaries that meet the criteria to be classified as held for
sale on acquisition

IAS 5: Disclosures
Others
Post-disposal transactions still classified separately as income/loss from discontinued
operations
Cessation of classification as discontinued operations reclassify income reported
from discontinued operations to continuing operations for all periods presented
Committed plan to sell a subsidiary involving loss of control
Gain/loss on the remeasurement of a non-current asset classified as held for sale but
does not meet definition of a discontinued operations

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IAS 8 QUIZ

IAS 8
Accounting Policies, Changes in
Accounting Estimates and Errors

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IAS 8: Background

Objective
Prescribe criteria for selecting and changing accounting policies
Prescribe accounting treatment and disclosure of:
Changes in accounting policies
Changes in accounting estimates
Correction of errors

IAS 8: Accounting Policies

Selection and application
- Dependent on the kinds of transactions recorded

a) Specific IFRS is applicable

- apply the specific IFRS

b) Absence of a specific IFRS

- use of management judgment
- managements guiding principle: resulting information should be:
(i) relevant
(ii) reliable
- faithful representation
- substance over form
- neutral, complete, prudent
- Sources, in descending order:
- IFRSs dealing with similar and related issues
- Conceptual Framework

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IAS 8: Accounting Policies

Consistency
- Consistent accounting policies for similar transactions
- If specifically required or permitted to categorize items for which different policies
may be appropriate, consistency is achieved on that category level.

Change of policy
- Criteria for changing an accounting policy:
(a) required by an IFRS
(b) will result in more reliable and relevant information
- Not a change in accounting policies:
(a) application of accounting policy for items that differ in substance from those
previously occurring
(b) application of a new accounting policy for items that did not occur previously
or were immaterial

IAS 8: Accounting Policies

Application
- Depends on the kind of change being applied

a) Change due to initial application of an IFRS

- specified transitional provisions
- In the absence of transitional provisions, use retrospective application

b) Voluntary change
- retrospective application

As if the new accounting policy had always been

RETROSPECTIVE applied:
- Adjust the opening balance of each affected
component of equity for the earliest period
APPLICATION presented
- Adjust other comparative amounts disclosed for
each prior period presented

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IAS 8: Accounting Policies

Limitations to retrospective application
a) When impracticable to determine period-specific effects
- apply accounting policy at the earliest period for which retrospective
application is practicable
- make a corresponding adjustment to the opening balance of each affected
component of equity for that period

b) When impracticable to determine cumulative effect

- prospective application

PROSPECTIVE Applying the new accounting policy after the date as

APPLICATION
at which the policy is changed

IAS 8: Accounting Policies

Disclosures
Initial application Voluntary change
Title of IFRS
If in accordance with transitional provisions,
description of such provisions and possible effect on
future periods

Nature of change
Amount of adjustment for the current period and each
prior period presented

Amount of adjustment relating to periods before those

presented

Circumstances leading to impracticability of

retrospective application and description of how and
from when the change in policy has been applied

Reasons for more reliable and relevant information

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IAS 8: Accounting Policies

Disclosures

Disclosures for new IFRS that are not yet effective and applied
- This fact
- Known or reasonably estimable information relevant to assessing the possible
impact that application of the IFRS will have on the FS in the period of initial
application

*
- Title of new IFRS
- Nature of change or impending change in policy
- Date of required application
- Date of planned initial application
- Either
(i) Discussion of expected impact
(ii) In the absence of (i), statement that impact is not know or reasonably
estimable

IAS 8: Change in Accounting Estimates

Examples:
- Bad debts
- Inventory obsolescence
- Fair value of financial assets or liabilities
- Useful lives and pattern of consumption
- Warranty obligations

Causes of change in accounting estimate:

- Change in circumstances on which the estimate was based
- Result of new information or more experience

PROSPECTIVE Recognizing the effect of the change in the current or

APPLICATION
future periods affected by the change

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IAS 8: Change in Accounting Estimates

Disclosures
- Nature of change
- Amount of change
- Current period
- Future period (unless impracticable)

IAS 8: Prior Period Errors

Definition
- Omissions from, and misstatements in, the entitys financial statements for one or
more prior periods arising from a failure to use, or misuse of, reliable information
that:
a) was available when the financial statements for those period were authorized
for issue; and
b) could reasonably be expected to have been obtained and taken into account
in the preparation of those financial statements

As if a prior period had never occurred:

RETROSPECTIVE - Restating the comparative amounts for the prior
period(s) presented in which the error occurred

RESTATEMENT
- If error occurred before the earliest period presented,
restating the opening balances of assets, liabilities and
equity for the earliest period presented

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IAS 8: Prior Period Errors

Limitations to retrospective restatement
a) When impracticable to determine period-specific effects
- restate the opening balances of assets, liabilities and equity for the earliest period
for which retrospective restatement is practicable

b) When impracticable to determine cumulative effect

- prospective restatement from the earliest date practicable

Disclosures
- Nature of prior period error
- Amount of correction for each period presented
- Amount of correction at the beginning of the earliest period presented
- Circumstances leading to impracticality of retrospective restatement and a
description of how and from when the error has been corrected

IAS 8: Impracticability
Distinguishing of information:
- Retrospectively applying an accounting policy or correcting a prior period error
requires distinguishing information that:
a) provides evidence of circumstances that existed on the date(s) as at which the
transaction, other event or condition occurred, and
b) would have been available when the financial statements for that prior period
were authorized for issue

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IAS 8 Quiz
Answer Key
1) Accounting policies
2) Change in accounting estimate
3) Prior period errors
4) Retrospective application
5) Retrospective restatement
6) Impracticable
7) Prospective application
8) Relevant; Reliable
9) False
10) True
11) False
12) False
13) True
14) True
15) True

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