FR - Accounting for Errors

Question 1

What is Accounting for errors in current period

Answer 1

Accounting error - An omission or misstatement even though the correct information was available at the time the error was made. Transaction recorded incorrectly

Question 2

Explain what correcting the journal entry is

Answer 2

It is adjusting journal entry is that an adjusting journal entry is a step in the accounting cycle that is required, whereas correcting entries are only required when errors occurred

Two ways of preparing for correcting
1. Prepare journal entries to make the correct net adjustment
2. REverse the incorrect entries made by the company and hen record the correct entries

Question 3

How do you account for accounting for prior period

Answer 3

Under IAS 8
Prior period error - error only affects one period, whereas others impact multiple periods
- Involves restating the prior period F/S to reflect those results that would have been presented had the error not occurred

Question 4

How is Impracticability for accounting for error determined

Answer 4

• The company can be exempt from the requirement to restate prior under the ground of impracticability

Question 5

How is impracticability determined for period specific events

Answer 5

• If they cannot be determined, the entity restates the opening balance of assets, liabilities and equity
• To determine the cumulative effect of the required change at the beginning of the period, the entity restates the comparative information to correct the error prospectively

Question 6

What are the required disclosure

Answer 6

1. Description of the nature of the error
   - Prior period presented, amount of error and each F/S line item impacted
   - REtrospective restatement is not practically a description of an error that has been corrected

Question 7

What is the difference between IFRS and ASPE

Answer 7

ASPE 1506 - Correction of error, ASPE will assume that the entity can retrospectively restate all required previous F/S