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ACCA Strategic Professional · Strategic Business Reporting (International) · Discussion of issues in financial reporting

Ellery Co's finance director proposes not applying a newly issued IFRS Accounting Standard that is not yet effective but permits early adoption, and instead says nothing in the financial statements. The standard will materially affect the financial statements. What does IAS 8 require?

IAS 8 requires an entity to disclose that a new standard has been issued but is not yet effective, together with known or reasonably estimable information about its likely impact on initial application. Silence is not acceptable, early adoption is optional, and no provision is booked.

  1. ANo disclosure, because the standard is not yet effective
  2. BDisclose that the standard has been issued but not yet applied, and give known or reasonably estimable information on its likely impactCorrect
  3. CApply the standard retrospectively immediately, as early adoption is mandatory
  4. DRecognise the expected impact as a provision in current profit or loss

Explanation

IAS 8 requires disclosure of a standard issued but not yet effective, with known or reasonably estimable information on the possible impact on initial application. Early adoption is optional, and no provision is recognised for expected effects.

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