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CA Final · Financial Reporting · Ind AS 8 Accounting Policies, Changes in Accounting Estimates and Errors

Kaveri Pharma Ltd's accountant states that 'accounting estimates' under Ind AS 8 means the principles and practices the company follows in preparing its statements, such as FIFO for inventory. How should this be corrected as per Ind AS 8?

The accountant is wrong. Under Ind AS 8, accounting estimates are monetary amounts in financial statements that are subject to measurement uncertainty. FIFO is a specific practice applied in preparing statements, so it is an accounting policy rather than an estimate.

  1. ACorrect; estimates and policies are the same thing under Ind AS 8
  2. BIncorrect; accounting estimates are monetary amounts in financial statements that are subject to measurement uncertainty, while FIFO is an accounting policyCorrect
  3. CIncorrect; accounting estimates are standards prescribed under Section 133 of the Companies Act, 2013
  4. DIncorrect; accounting estimates are errors discovered in prior period statements

Explanation

Ind AS 8 defines accounting estimates as monetary amounts in financial statements subject to measurement uncertainty. FIFO is a specific practice applied in preparing statements, hence an accounting policy. Option C describes Ind AS, and option D confuses estimates with prior period errors.

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