07-12-2006, 04:43 AM
hey dear i got the reply
a nice reply
i wud like to share wid u people
here it is;
Dear Junaid
Your queries are interesting and these queries convinced me to read the relevant paragraphs of IAS 8. By the way, a point wise reply to your queries is as under.
Answer to Question number 1.
No doubt that the requirements in Para 8.27 are same as per the requirements in para 8.25, however, you should note that para 8.25 is typed in bold and italics. All paragraphs typed in accounting standards as well as IFRS are the standards that represents requirements. The other paragraphs typed in normal fonts are interpretation of the bold and italic paragraphs and contains examples and guidelines of the standards. The theme of both paragraphs is that when it is impracticable to determine the aggregate cumulitive effect of change in accounting policy and retrospective application is not possible, it should be applied prospectively. Guidance on impracticability is laid down in paras 50-53 of the standard.
Answer to Question Number 2.
You required examples of the cases when it is impractible for an organization to determine the period specific effect or cumulitive effect of changing an accounting policy. One example regarding impractibality to determine the cumulitive effect is laid down in Appendix to the IAS 8. For you reference i am attaching this example in MS word format. An example regarding impractibility to determine the period specific effect may be as follows.
In 2006, X company decides to change its accounting policy for carrying its available for sale investments at fair value and recognizing the resulting gain as a change in equity. Previously such gain was being recognized as profit or loss for a period. The company acquired available for sale investments in 2000 at a cost of say Rs. 100,000 and there was no movement (that is sale and purchase) in this account since then. Now it is possible for the company to compute the aggregate effect as at December 2006 since by valuing number of shares in hand as at December 2006 at market value and deducting the cost of acquisition as at 2000 from the market value. However it will not be possible to determine the period specific effect due to lack of market information / market price information before 2006 or 2005. So the X company has a choice to restate the earliest period presented by excluding the gain / loss due to remeasurement of available for sale financial assets from the net profit or loss of the earliest period presented in this case it will be 2006 or 2005 as appropriate.
Answer to Question number 3
I think the above example quoted is self explanatory for this question also as it describes that it is possible to compute the aggregate effect but not possible to compute whether there was a remeasurement gain / loss in 2002, 2003 or 2004 etc.
I hope the above responses would clarify the matters. However, should you have any further query, please do not hesitate to send it to FinProS.
Best Regards
Shafiq AhmedACA
a nice reply
i wud like to share wid u people
here it is;
Dear Junaid
Your queries are interesting and these queries convinced me to read the relevant paragraphs of IAS 8. By the way, a point wise reply to your queries is as under.
Answer to Question number 1.
No doubt that the requirements in Para 8.27 are same as per the requirements in para 8.25, however, you should note that para 8.25 is typed in bold and italics. All paragraphs typed in accounting standards as well as IFRS are the standards that represents requirements. The other paragraphs typed in normal fonts are interpretation of the bold and italic paragraphs and contains examples and guidelines of the standards. The theme of both paragraphs is that when it is impracticable to determine the aggregate cumulitive effect of change in accounting policy and retrospective application is not possible, it should be applied prospectively. Guidance on impracticability is laid down in paras 50-53 of the standard.
Answer to Question Number 2.
You required examples of the cases when it is impractible for an organization to determine the period specific effect or cumulitive effect of changing an accounting policy. One example regarding impractibality to determine the cumulitive effect is laid down in Appendix to the IAS 8. For you reference i am attaching this example in MS word format. An example regarding impractibility to determine the period specific effect may be as follows.
In 2006, X company decides to change its accounting policy for carrying its available for sale investments at fair value and recognizing the resulting gain as a change in equity. Previously such gain was being recognized as profit or loss for a period. The company acquired available for sale investments in 2000 at a cost of say Rs. 100,000 and there was no movement (that is sale and purchase) in this account since then. Now it is possible for the company to compute the aggregate effect as at December 2006 since by valuing number of shares in hand as at December 2006 at market value and deducting the cost of acquisition as at 2000 from the market value. However it will not be possible to determine the period specific effect due to lack of market information / market price information before 2006 or 2005. So the X company has a choice to restate the earliest period presented by excluding the gain / loss due to remeasurement of available for sale financial assets from the net profit or loss of the earliest period presented in this case it will be 2006 or 2005 as appropriate.
Answer to Question number 3
I think the above example quoted is self explanatory for this question also as it describes that it is possible to compute the aggregate effect but not possible to compute whether there was a remeasurement gain / loss in 2002, 2003 or 2004 etc.
I hope the above responses would clarify the matters. However, should you have any further query, please do not hesitate to send it to FinProS.
Best Regards
Shafiq AhmedACA
