EstimatesEstimates

Estimates

14 An entity’s estimates in accordance with Australian Accounting Standards at the date of transition to Australian Accounting Standards shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error.

15 An entity may receive information after the date of transition to Australian Accounting Standards about estimates that it had made under previous GAAP. In accordance with paragraph 14, an entity shall treat the receipt of that information in the same way as non-adjusting events after the reporting period in accordance with AASB 110 Events after the Reporting Period. For example, assume that an entity’s date of transition to Australian Accounting Standards is 1 January 20X4 and new information on 15 July 20X4 requires the revision of an estimate made in accordance with previous GAAP at 31 December 20X3. The entity shall not reflect that new information in its opening Australian-Accounting-Standards statement of financial position (unless the estimates need adjustment for any differences in accounting policies or there is objective evidence that the estimates were in error). Instead, the entity shall reflect that new information in profit or loss (or, if appropriate, other comprehensive income) for the year ended 31 December 20X4.

16 An entity may need to make estimates in accordance with Australian Accounting Standards at the date of transition to Australian Accounting Standards that were not required at that date under previous GAAP. To achieve consistency with AASB 110, those estimates in accordance with Australian Accounting Standards shall reflect conditions that existed at the date of transition to Australian Accounting Standards. In particular, estimates at the date of transition to Australian Accounting Standards of market prices, interest rates or foreign exchange rates shall reflect market conditions at that date.

17 Paragraphs 14-16 apply to the opening Australian-Accounting-Standards statement of financial position. They also apply to a comparative period presented in an entity’s first Australian-Accounting-Standards financial statements, in which case the references to the date of transition to Australian Accounting Standards are replaced by references to the end of that comparative period.