TMI BlogNet Profit or Loss for the Period, Prior Period Items and Changes in Accounting PoliciesX X X X Extracts X X X X X X X X Extracts X X X X ..... and disclosure of certain items in the statement of profit and loss so that all enterprises prepare and present such a statement on a uniform basis. This enhances the comparability of the financial statements of an enterprise over time and with the financial statements of other enterprises. Accordingly, this Standard requires the classification and disclosure of extraordinary and prior period items, and the disclosure of certain items within profit or loss from ordinary activities. It also specifies the accounting treatment for changes in accounting estimates and the disclosures to be made in the financial statements regarding changes in accounting policies. Scope 1. This Standard should be applied by an enterprise in presenting pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he specific accounting principles and the methods of applying those principles adopted by an enterprise in the preparation and presentation of financial statements. Net Profit or Loss for the Period 5. All items of income and expense which are recognised in a period should be included in the determination of net profit or loss for the period unless an Accounting Standard requires or permits otherwise. 6. Normally, all items of income and expense which are recognised in a period are included in the determination of the net profit or loss for the period. This includes extraordinary items and the effects of changes in accounting estimates. 7. The net profit or loss for the period comprises the following components, each of which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for an insurance enterprise that insures against such risks. 11. Examples of events or transactions that generally give rise to extraordinary items for most enterprises are:- -attachment of property of the enterprise; -or an earthquake. Profit or Loss from Ordinary Activities 12. When items of income and expense within profit or loss from ordinary activities are of such size, nature or incidence that their disclosure is relevant to explain the performance of the enterprise for the period, the nature and amount of such items should be disclosed separately. 13. Although the items of income and expense described in paragraph 12 are not extraordinary items, the nature and amount of such items may be relevant to users of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, e.g., arrears payable to workers as a result of revision of wages with retrospective effect during the current period. 17. Errors in the preparation of the financial statements of one or more prior periods may be discovered in the current period. Errors may occur as a result of mathematical mistakes, mistakes in applying accounting policies, misinterpretation of facts, or oversight. 18. Prior period items are generally infrequent in nature and can be distinguished from changes in accounting estimates. Accounting estimates by their nature are approximations that may need revision as additional information becomes known. For example, income or expense recognised on the outcome of a contingency which previously could not be estimated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appropriate disclosure. 23. The effect of a change in an accounting estimate should be included in the determination of net profit or loss in: (a) the period of the change, if the change affects the period only; or (b) the period of the change and future periods, if the change affects both. 24. A change in an accounting estimate may affect the current period only or both the current period and future periods. For example, a change in the estimate of the amount of bad debts is recognised immediately and therefore affects only the current period. However, a change in the estimated useful life of a depreciable asset affects the depreciation in the current period and in each period during the remaining useful life of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a different accounting policy is required by statute or for compliance with an accounting standard or if it is considered that the change would result in a more appropriate presentation of the financial statements of the enterprise. 30. A more appropriate presentation of events or transactions in the financial statements occurs when the new accounting policy results in more relevant or reliable information about the financial position, performance or cash flows of the enterprise. 31. The following are not changes in accounting policies: (a) the adoption of an accounting policy for events or transactions that differ in substance from previously occurring events or transactions, e.g., introduction of a formal retirement ..... X X X X Extracts X X X X X X X X Extracts X X X X
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