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Important Stuff on Ind AS 8, Accounting Policies, Changes in Accounting Estimates and Errors

Indian Accounting Standard (Ind AS) 8, Accounting Policies, Changes in Accounting Estimates and Errors, Important Material

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Ind AS 8: Accounting Policies, Changes in Accounting Estimates and Errors

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

A change in accounting estimate is an adjustment of the carrying amount of an asset or a liability, or the amount of the periodic consumption of an asset, that results from the assessment of the present status of, and expected future benefits and obligations associated with, assets and liabilities. Changes in accounting estimates result from new information or new developments and, accordingly, are not corrections of errors.

Errors can arise in respect of the recognition, measurement, presentation or disclosure of elements of financial statements. Financial statements do not comply with Ind ASs if they contain either material errors or immaterial errors made intentionally. Potential current period errors discovered in that period are corrected before the financial statements are approved for issue. However, material errors are sometimes not discovered until a subsequent period, and these prior period errors are corrected in the comparative information presented in the financial statements for that subsequent period.

Objectives

(a) to prescribe the criteria for selecting and changing accounting policies, together with the accounting treatment and disclosure of changes in accounting policies, accounting treatment and disclosure of changes in accounting estimates and corrections of errors.
(b) to enhance the relevance and reliability of an entity’s financial statements, and the comparability of those financial statements over time and with the financial statements of other entities.

Scopes

(a) Selecting and applying accounting policies, and
(b) accounting for changes in accounting policies,
(c) changes in accounting estimates, and
(d) corrections of prior period errors.

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