On Sun, 2009-09-06 at 16:00 +0100, GERALD LEVY wrote:
> >
> > "FRS3 ...
> > FRS3 states that a prior period adjustment is required to correct a
> > fundamental error or change in accounting policy. A fundamental error is
> > classified as an error which is so significant that the truth and
> > fairness of the financial statements is not achieved."
> > http://www.accountingweb.co.uk/item/186447
>
>
> Hi Phil:
>
> Unless I am mistaken, the above is intended to deal with such things
> as mathematical errors on the part of the accountants - literally
> adding up things wrongly. Is your interpretation of accounting
> conventions actually born out by the experience of accountants? For example,
> have accountants themselves used FRS3 to adjust the valuation of
> fixed capital due to premature and unanticipated obsolescence? Just
> asking.
>
>
Hi Jerry
The FR3 quote was just to show that accountants do make prior year
adjustments. I suspect that in moral depreciation cases they most often
do what Chai-On suggested -- write off in the current year.
They would be wrong to do so because in the example years 1 to 4 are
exactly the same and year 4 should not be saddled with the whole
adjustment.
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Received on Sun Sep 6 13:04:51 2009
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