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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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If a company that uses IFRS discovers an error but determines that it is impracticable to restate its financial statements for all prior periods, what alternatives does IFRS allow? How does this compare with U.S. GAAP?

To determine
  • Indicate the alternatives allowed under IFRS (International Financial Reporting Standards), in reporting the discovered error which is impracticable for the application of the retrospective adjustment method.
  • Indicate the alternatives allowed under GAAP (Generally Accepted Accounting Principles), in reporting the discovered error which is impracticable for the application of the retrospective adjustment method.
Explanation

Errors: The comparability and consistency of the financial statements decreases when a company records arithmetic mistakes, or errors. Such errors do require adjustments to make the financial information more reliable, and more relevant.

Alternatives allowed under IFRS: Under IFRS, if the error is discovered and is impracticable to apply the retrospe...

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