The Accountant in Preparation for the Financial Statement for the Year

question 32

Multiple Choice

The accountant in preparation for the financial statement for the year 2013 realised an error in the determination of recoverable amounts in last year's financial statements.This error had it been detected in 2012 would have required the recognition of impairment losses amounting to £500 000.To comply with IAS 8 Accounting Policies,Changes in Accounting Estimates and Errors,the accountant should:

• A)make a prospective change to the 2013 figures, on the basis that he has made an error in 2012.
• B)make a prospective change to the 2013 figures, on the basis that he is making a change to an estimate in 2012.
• C)make a retrospective change to the 2013 figures, on the basis that that this is a change in accounting estimates.
• D)make a retrospective change to the 2013 figures, on the basis that he has made an error in 2012.

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Definitions:

Core Purpose Statement

A declaration that identifies the fundamental reason an organization exists, beyond just making a profit.

Risk of Harm

The potential for actions, situations, or products to cause injury, damage, or adverse effects to individuals or groups.

Decision Making

The cognitive process of selecting a course of action among multiple alternatives.

Subjective Probability

An individual's personal estimate of the chance of occurrence of a particular event.