Provide some examples of items that would be adjusted directly against equity, rather than being included as part of profit or loss.
You are to consider the following two scenarios:
Scenario 1 Fishtail Ltd has changed its basis of calculating doubtful debts from 2.5 per cent of gross accounts receivable to 4.0 per cent of gross accounts receivable.
Scenario 2 Fishtail Ltd has previously allocated costs to inventory using a weighted-average costing approach. It was decided to change to a first-in, first-out inventory cost-flow assumption.
Identify, giving reasons, which of the above scenarios is a change in accounting policy and which is not a change in accounting policy. Further, you are required to describe how the above scenarios are to be accounted for.
On 30 June 2023, the end of the current reporting period, Lynch Ltd made a decision, using the information obtained over the past few years, to revise the useful life of a particular item of its buildings acquired ten years earlier for $2 000 000. The useful life was revised from being a total of 25 years to being a total of 15 years. The building was originally depreciated on the straight-line basis over its useful life and it was expected that the asset would have no residual value. No depreciation has been provided in the current period.
(a) Prepare the journal entry to account for the change in accounting estimate.
(b) Assuming that the change in accounting estimate had a material effect on financial performance for the period, prepare appropriate supporting note.
What is non-IFRS financial information? Discuss how ASIC's RG230 could be applied to minimise the provision of non-IFRS financial information that could be misleading to investors.
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