Retrospectively or Prospectively?
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 16Q: What is the definition of present value?
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Retrospectively or Prospectively?
Expert Solution
Step 1
As per the general principal of IAS 8 an entity must correct all material prior period errors retrospectively.
However, if the period specific effect of error is not identifiable then opening balance of the asset, liability, and equity for which retrospective restatement is required should be adjusted.
Further, if the cumulative impact of the error is not determinable then prospective adjustments should be made.
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