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IASB Exposure Draft ED/2017/5 Accounting Policies and Accounting Estimates (Proposed amendments to IAS 8)

The IFRS Interpretations Committee informed the International Accounting Standards Board (IASB) about diversity in the way entities distinguish accounting policies from accounting estimates. That distinction has consequences because IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors contains different requirements on how to account for changes in accounting policies and for changes in accounting estimates.

In this Exposure Draft, the IASB proposes to amend IAS 8. The proposed amendments aim to help entities distinguish accounting policies from accounting estimates. More specifically, the proposed amendments would clarify:

(a) how accounting policies and accounting estimates relate to each other, by:

     (i) explaining that accounting estimates are used in applying accounting policies; and

     (ii) making the definition of accounting policies clearer and more concise;

(b) that selecting an estimation technique, or valuation technique, used when an item in the financial statements cannot be measured with precision, constitutes making an accounting estimate; and

(c) that, in applying IAS 2 Inventories, selecting the first-in, first-out (FIFO) cost formula or the weighted average cost formula for interchangeable inventories constitutes selecting an accounting policy.

To download the Exposure Draft, click here

Invitation to comment

The Exposure Draft is open for comment until 15 December 2017.

You may provide your comments online or email us at technical@masb.org.my.