课件IAChap020PPT

McGraw-Hill/Irwin,ACCOUNTINGCHANGESANDERROR,Chapter20,2013TheMcGraw-HillCompanies,Inc.,AccountingChanges,CorrectionofanError,AccountingChangesandErrorCorrections,Retrospective,TwoReportingApproaches,Prospective,ErrorCorrectionsandMostChangesinPolicies,Retrospective,TwoReportingApproaches,Prospective,Reviseprioryearsstatements(thatarepresentedforcomparativepurposes)toreflecttheimpactofthechange.Thebalanceineachaccountaffectedisrevisedtoappearasifthenewlyadoptedaccountingpolicyhadbeenappliedallalongorthattheerrorhadneveroccurred.Adjustthebeginningbalanceofretainedearningsfortheearliestperiodreported.,TheRetrospectiveApproach,ChangesinEstimates,Retrospective,TwoReportingApproaches,Prospective,Thechangeisimplementedinthecurrentperiod,anditseffectsarereflectedinthefinancialstatementsofthecurrentandfutureyearsonly.Prioryearsstatementsarenotrevised.Accountbalancesarenotrevised.,QualitativeCharacteristics,Althoughconsistencyandcomparabilityaredesirable,changingtoanewpolicysometimesisappropriate.,ChangeinAccountingPolicy,Consistency,Comparability,Accountingstandardspresentsomechoicestocompanieswithrespecttoaccountingpolicies.,ChangeinAccountingPolicy,MotivationforAccountingChoices,ChangingConditions,NewAccountingStandardIssued,EffectonCompensation,EffectonDebtAgreements,EffectonUnionNegotiations,MotivationsforChange,EffectonIncomeTaxes,RetrospectiveApproachMostChangesinAccountingPolicies,LetslookatanexamplesofachangefromWeightedAverage(WA)costingmethodtotheFIFOmethod.Atthebeginningof2012,AirPartsCorporationchangedfromWAtoFIFO.AirPartshaspaiddividendsof$40millioneachyearsince2004.Itsincometaxrateis20percent.RetainedearningsonJanuary1,2010,was$700million;inventorywas$500million.Selectedincomestatementamountsfor2012andprioryearsare(inmillions):,ReviseComparativeFinancialStatements,Foreachyearreported,AirPartsmakesthecomparativestatementsappearasifthenewlyadoptedaccountingmethod(FIFO)hadbeeninuseallalong.,Note:onlytwoperiodsneedtobereportedforstatements,withtheexceptionofthestatementoffinancialposition.,ReviseComparativeFinancialStatements,Foreachyearreported,AirPartsmakesthecomparativestatementsappearasifthenewlyadoptedaccountingmethod(FIFO)hadbeeninuseallalong.,Foreachyearreported,AirPartsmakesthecomparativestatementsappearasifthenewlyadoptedaccountingmethod(FIFO)hadbeeninuseallalong.,ReviseComparativeFinancialStatements,Foreachyearreported,AirPartsmakesthecomparativestatementsappearasifthenewlyadoptedaccountingmethod(FIFO)hadbeeninuseallalong.,ReviseComparativeFinancialStatements,January1,2011:Inventory.400,000,000Retainedearnings.320,000,000Deferredtaxliability.80,000,000Toincreaseinventory,retainedearnings,anddeferredtaxliabilityasaresultofthechangefromweightedaveragetoFIFO.,AdjustAccountsfortheChange,OnJanuary1,2012,thedateofthechange,thefollowingjournalentrywouldbemadetorecordthechangeinPolicy.,20%of$400,000,000,DisclosureNotes,ProspectiveApproachSomeChangesinPolicies,Sometimesalackofinformationmakesitimpracticabletoreportachangeretrospectivelysothenewpolicyissimplyappliedprospectively.Forexample:AUScompanyswitchingfromFIFOtoLIFOmaynothavekeptrecordsoftherequiredinformationtorestatepastperiods.Acompanyadoptingthefairvalueoptionforanamortizedcostdebtinstrumentwouldnotbeabletofathomthemanagersintentinpastperiods.Acompanymovingtoadoptthefairvaluemodelforitsinvestmentproperties(whicharethinlytraded)wouldnotbeabletoguesswhattheirdiscountedcashflowprojectionswouldhavebeenlikeinthepastperiods.,Mostchangesinpoliciesarereportedbytheretrospectiveapproach,but:,ProspectiveApproachSomeChangesinPolicies,ProspectiveApproachSomeChangesinPolicies,Thereisanotherexceptiontoretrospectiveapplication.ThatiswhenanIASBStatementoranotherauthoritativepronouncementrequiresprospectiveapplicationforspecificchangesinaccountingpolicies:TheentityisrequiredtofollowtheIFRSprescribedtransitionalprovisionswhenitfirstappliesthechangesinaneworamendedstandard.Incertaininstances,prospectiveapplicationofthenewIFRSisrequired.AnexamplewouldbetheimplementationofIFRSNo.3,“BusinessCombinations”.,Mostchangesinpoliciesarereportedbytheretrospectiveapproach,however:,Achangeindepreciationmethodisnotachangeinpolicybutachangeintheexpectedpatternofconsumptionofbenefitsofanasset,therefore,weaccountforsuchachangeprospectively;thatis,preciselythewayweaccountforchangesinestimates.,Note:Adisclosurenoteshoulddescribethenatureandeffectofthechangeintheaccountingestimateinthecurrentaswellasfutureperiodsaffectedbythechange.Iftheamountofeffectinfutureperiodscouldnotbedetermined,thecompanyshoulddisclosethatfact.,ProspectiveApproachChangeinAccountingEstimate,OnJanuary1,2008,TowingLtdpurchasedspecializedequipmentfor$243,000.Theequipmenthasbeendepreciatedusingthestraight-linemethodandhadanestimatedlifeof10yearsandsalvagevalueof$3,000.Attheendof2011thetotalusefullifeoftheequipmentwasrevisedto6years.Calculatethe2012depreciationexpense.,ChangeinAccountingEstimate,$243,000$3,000=$24,000(20082011)10years$24,0004years=$96,000Accum.Depr.$243,000$96,000=$147,000BookValue$147,000$3,000=$72,000(2012&2013)2years,Changesinaccountingestimatesareaccountedforprospectively.Letslookatanexampleofachangeinadepreciationestimate.,UniversalSemiconductorsswitchedfromSYDdepreciationtostraight-linedepreciationin2012.Theassetwaspurchasedatthebeginningof2010for$63million,hasausefullifeof5yearsandanestimatedresidualvalueof$3million.,ChangingDepreciationMethods,ChangingDepreciationMethods,Depreciationadjustingentryfor2012,2013,and2014.,ChangingDepreciationMethods,Depreciationexpense.8,000,000Accumulateddepreciation.8,000,000Torecorddepreciationexpense.,APPLICATIONOFACCOUNTINGPOLICIESTODIFFERENTORNEWTRANSACTIONS,CONDITIONS,ANDEVENTS,Theseshouldbeaccountedforprospectively,APPLICATIONOFACCOUNTINGPOLICIESTODIFFERENTORNEWTRANSACTIONS,CONDITIONS,ANDEVENTS,ErrorCorrection,ErrorsarisefromthemisuseoforthefailuretouseavailableinformationthatcouldhavebeenreasonablyobtainedasofthedatewhenthefinancialstatementswereauthorizedforissueExamplesinclude:UseofinappropriatepoliciesMistakesinapplyingIFRSArithmeticmistakesFraudorgrossnegligenceinreportingForallyearsdisclosed,financialstatementsareretrospectivelyrestatedtoreflecttheerrorcorrection.,CorrectionofAccountingErrors,Four-stepprocessPrepareajournalentrytocorrectanybalances.Retrospectivelyrestateprioryearsfinancialstatementsthatwereincorrect.Reportcorrectionasapriorperiodadjustmentifretainedearningsisoneoftheincorrectaccountsaffected.Includeadisclosurenotethatshoulddescribethenatureoftheerrorandtheimpactoneachlineitemaffectedandearningspershareforeachpriorperiodpresented,CorrectionofAccountingErrors,Retrospectivelyrestateprioryearsfinancialstatementsthatwereincorrect.,ErrorsOccurredandDiscoveredintheSamePeriod,Correctedbyreversingtheincorrectentryandthenrecordingthecorrectentry(orbymakinganentrytocorrecttheaccountbalances),ErrorsNotAffectingPriorYearsNetIncome,Involvesincorrectclassificationofaccounts.Requirescorrectionofpreviouslyissuedstatements(retrospectiveapproach).Isnotclassifiedasapriorperiodadjustmentsinceitdoesnotaffectpriorincome.Disclosenatureoferror.,ErrorAffectingPriorYearsNetIncome,Requirescorrectionofpreviouslyissuedstatements(retrospectiveapproach).Allincorrectaccountbalancesmustbecorrected.Isclassifiedasapriorperiodadjustmentsinceitdoesaffectpriorincome.Disclosenatureoferror.,In2012,internalauditorsdiscoveredthatSeidmanDistributionLtd.haddebitedanexpenseaccountforthe$7millioncostofsortingequipmentpurchasedatthebeginningof2010.Theequipmentsusefullifewasexpectedtobe5yearswithnoresidualvalue.Straight-linedepreciationisusedbySeidman.,Analysis($inmillions):,ErrorAffectingPriorYearsNetIncome,CorrectDecember31,2010:Equipment.7.0Cash.7.0Expense.1.4Accum.Depr.1.4December31,2011:Expense.1.4Accum.Depr.1.4,CorrectDecember31,2010:Expense.7.0Cash.7.0DepreciationentryomittedDecember31,2011:Depreciationentryomitted,Tocorrectincorrectaccounts,ErrorAffectingPriorYearsNetIncome,2011($inmillions):Equipment.7.0AccumulatedDepreciation.2.8RetainedEarnings.4.2,LetsassumethefollowingforOrionLtd:OnJan1,2011,theretainedearningsbalancewas$922,000.In2011,thecompanypaid$65,000individends.Netincomefor2011was$184,000.Correctionoferrorfor2010was$50,000.,ErrorAffectingPriorYearsNetIncome,TheStatementofRetainedEarnings(orREcolumnoftheStatementofShareholdersEquity)wouldbeasfollows:,CorrectionofAccountingErrors,Identifythetypeofaccountingerrorforthefollowingitem:Endinginventorywasincorrectlycounted.,CounterbalancingerroraffectingnetincomeTheendinginventoryinoneperiodwillbeincorrectandthebeginninginventoryinthenextperiodwillalsobeincorrect.Sincetheinventorybalanceeffectscostofgoodssold,incomewillalsobeincorrectinthetwoperiods,bythesameamount.Attheendofthetwoperiods,ifnoothererrorsaremade,thebalancesininventoryandretainedearningsarecorrect.,Cor