Dear all,

As I know , as per IFRS there is no prior year adjustment anymore ,
and back dated entries are not allowed once the year closed and
figures reported , Hence the actual variance will be booked in the
next year PL ,

example : if company A , estimated an income in 2007 and took a
provision for this income for 1M $ in 2007

The actual income received in 2008 for 2M$ , the
accounting entry will be reversing the 1M$ provision and Book the 1M$
variance in 2008 PL

My question is , As per IFRS this is the best way to Treat the above
case , What about the financial position misstatement? in this
treatment we have overstated 2008 and understated 2007 .

how this is write in case of bad estimation ?


You should refer to IAS 8 “Accounting Policies, Changes in Accounting
Estimates and Errors” paragraphs 32 – 40:
32As a result of the uncertainties inherent in business activities,
many items in financial statements cannot be measured with precision
but can only be estimated. Estimation involves judgments based on the
latest available, reliable information.

33The use of reasonable estimates is an essential part of the
preparation of financial statements and does not undermine their
34An estimate may need revision if changes occur in the circumstances
on which the estimate was based or as a result of new information or
more experience. By its nature, the revision of an estimate does not
relate to prior periods and is not the correction of an error.
A change in the measurement basis applied is a change in an accounting
policy, and is not a change in an accounting estimate. When it is
difficult to distinguish a change in an accounting policy from a
change in an accounting estimate, the change is treated as a change in
an accounting estimate.
36The effect of a change in an accounting estimate, other than a
change to which paragraph 37 applies, shall be recognized
prospectively by including it in profit or loss in:

37To the extent that a change in an accounting estimate gives rise to
changes in assets and liabilities, or relates to an item of equity, it
shall be recognized by adjusting the carrying amount of the related
asset, liability or equity item in the period of the change.
38Prospective recognition of the effect of a change in an accounting
estimate means that the change is applied to transactions, other
events and conditions from the date of the change in estimate. A
change in an accounting estimate may affect only the current period’s
profit or loss, or the profit or loss of both the current period and
future periods. For example, a change in the estimate of the amount of
bad debts affects only the current period’s profit or loss and
therefore is recognized in the current period. However, a change in
the estimated useful life of, or the expected pattern of consumption
of the future economic benefits embodied in, a depreciable asset
affects depreciation expense for the current period and for each
future period during the asset’s remaining useful life. In both cases,
the effect of the change relating to the current period is recognized
as income or expense in the current period. The effect, if any, on
future periods is recognized as income or expense in those future
39An entity shall disclose the nature and amount of a change in an
accounting estimate that has an effect in the current period or is
expected to have an effect in future periods, except for the
disclosure of the effect on future periods when it is impracticable to
estimate that effect.
40If the amount of the effect in future periods is not disclosed
because estimating it is impracticable, an entity shall disclose that

Best regards