ED/2017/5 Accounting Policies and Accounting Estimates (Proposed amendments to IAS 8)

The International Accounting Standards Board (IASB) has published an exposure draft proposing narrow-scope amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors.

The purpose of the proposed amendments is to help companies distinguish accounting policies from accounting estimates and clarify:

• how accounting policies and accounting estimates relate to each other, by explaining that accounting estimates are used in applying accounting policies and making the definition of accounting policies clearer and more concise;

• that selecting an estimation technique, or valuation technique, used when an item in the financial statements cannot be measured with precision, constitutes making an accounting estimate; and

• that, in applying IAS 2 Inventories, selecting the first-in, first-out (FIFO) cost formula or the weighted average cost formula for interchangeable inventories constitutes selecting an accounting policy

The ED is open for comment until 15 January 2018 and is available from the IASB’s web site here.