A material prior period error in year ending 2009 was subsequently discovered in 2010.To comply with AASB 108 Accounting Policies,Changes in Accounting Estimates and Errors an entity should:
A) reissue the 2009 financial statements with the error corrected.
B) make a retrospective adjustment in 2009.
C) make a retrospective adjustment in 2010.
D) make a prospective adjustment in 2009.

Question

Quizplus · Accepted Answer

According to AASB 108, a material prior period error should be corrected by making a retrospective adjustment in the first set of financial statements affected after the error is discovered. In this case, the error was discovered in 2010, therefore a retrospective adjustment should be made in the 2010 financial statements. This means that the 2009 financial statements will remain unchanged, but the 2010 financial statements will reflect the correction of the error in the prior period.

A Material Prior Period Error in Year Ending 2009 Was