Question

A change in accounting principle that is implemented using the retrospective approach includes restating financial statements...

A change in accounting principle that is implemented using the retrospective approach includes restating financial statements of all periods presented as if the new standard had been used in those periods.

True

False

Business   Accounting   
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Homework Answers

Answer #1

True.

Reason :

IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, states that an entity is permitted to change the accounting policies only if :

  • it is required by a standard or interpretation; or
  • results in the financial statements providing reliable and more relevant information about the effects of transactions, other events or conditions on the entity's financial position, financial performance, or cash flows.

As a general rule, changes in Accounting Policies must be applied retrospectively in the financial statements. Retrospective application means that entity implements the change in accounting policy as though it had always been applied.

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