Accounting Changes in Interim Periods.

Change in estimate. A Change in estimate should be accounted for in the interim period in
which the change is made. No restatement of previously reported interim information should be
made, but the effect on earnings of a change in estimate made in a current interim period should
be reported in the current and subsequent interim periods, if material in relation to any period
presented, and should continue to be reported as long as necessary to avoid misleading
comparisons.
The standards include all voluntary accounting changes and accounting changes where a
new accounting pronouncement does not include specific transition provisions. Current GAAP
require retrospective application to financial statements of prior periods where practical. if not
practical, the statement requires that the new statement be applied to the earliest period that is
practical. If one of the prior year's financial statements being presented cannot be adjusted,an
adjustment should be made to the beginning balance of retained earnings and not included in
income.
Minimum Disclosures in Interim Reports
Because the amount of financial information disclosed in interim reports varies widely,
the standards established minimum disclosures as follows:
a. Sales or gross revenues, provision for income taxes, extraordinary items (including
related income tax effects), and net income.
b. Basic and diluted earnings-per-share data for each period presented determined in
accordance with the provisions of FASB ASC topic 260 (earning per share).
c. Seasonal revenue, costs, or expenses.
d. Significant changes in estimates or provisions for income taxes.
e. Disposal of a segment of a business and extraordinary, unusual, or infrequently
occurring items
f. Contingent items.
g. Changes in accounting principles or estimates.
h. Significant changes in financial position.
Overall, the APB and FASB have made a significant effort to improve the quality of
interim financial reports. However, considerable controversy still exists and appears to center
around the APB's assumption that an interim period should be accounted for as an integral part of
the annual period.
International Issues In Interim Reporting
IAS 34, "Interim Financial Reporting," does not state which entities should prepare and
publish interim financial statements. The standard determines the minimum content of the

interim reports if the entity elects or is required to prepare interim financial statements. IAS 34
generally requires that the interim period be a discrete reporting period.
IAS 34 applies when an entity publisher an interim financial report in accordance with
International Financial Reporting Standards (IFRS). An interim financial report refers here to a
financial report containing either a complete set of financial statements (described in IAS 1,
Presentation of Financial Statements) or a set of condensed financial statements (described in
this Standard) for an interim period; an interim period refers to any financial reporting period
shorter than a full year. For the sake of timelines and cost considerations, as well as to avoid
repetition of information and reported previously, an entity may provide less information at
interim dates than in its annual financial statements. This Standard defines the minimal and
content of an interim financial report as containing condensed financial statements and selected
explanatory notes. The purpose of the interim financial reports is to provide an update to the
latest complete set of annual financial reports. Accordingly, it focuses on new activities, events,
and circumstances rather than duplicating information already reported. The standard is not,
however, intended to prohibit or discourage an entity from publishing a complete set of financial
statements (as described in IAS l) in its interim financial report if it chooses to do so. If such a
complete set of financial statements is reported in the interim reports, the form and content of
those statements is should conform to the requirements of IAS 1.
An interim financial report should, at a minimum, include:
(a) Condensed income statement
(b) Condensed balance sheet
(c) Condensed statement showing either (i) all changes in equity or (ii) changes in equity except
for those arising form capital transactions with owners and distributions to owners.
(d) Condensed cash flow statements
(e) selected explanatory notes
if an entity chooses to publish condensed financial statements in its interim financial
report, those condensed statements must include each of the headings and subtotals that were
included statements must include each of the headings and explanatory in its most recent annual
financial statements and the items notes as required by this standard. furthermore, additional line
items or notes should be included if their omission would make the condensed interim financial
statements misleading for any reason.
Materiality with respect to measurement, classification, and disclosure should be assessed
in relation the interim period financial data. In making assessments of materiality, it should be
recognized that interim measurements may rely on estimates to a larger degree than annual
measurements do.
The same accounting policies should be applied in interim financial statements there are
used in a firm's annual financial statements, with the possible exception of any accounting
policy changes made after the date of the most recent annual financial statements that are to be
reflected in the next annual financial statements. thus measurements for interim reporting

purposes are made on a year to date basis. the measurement procedures for interim reporting are
designed to ensure that the resulting information is reliable and that all material financial
information relevant to an understanding of the financial position or performance of the entity is
disclosed.
Differences between IFRS and US GAAP Interim Reporting
The view of an interim period is conceptually quite different under U.S. GAAP and under
IFRS. Under IFRS, the interim period is defined as a discrete reporting period, certain
exceptions. Recall that discrete reporting treats each interim period as a basic accounting period
to be evaluated as if it were an annual period. Thus, end of period adjustments and deferrals are
determined using the same principles as the annual report. Under U.S. GAAP, an interim period
is an integral part of the full year (again, with certain exceptions). Thus, the adjustments and
deferrals may be affected by judgment about the expected results for the entire year.
Disclosures for changes in accounting policy also differ significantly between U.S GAAP
and current IFRS. IFRS require the disclosure of any differences between accounting policies in
the current interim period compared to the most recent annual financial statements as well as,
minimum, a description of the nature and effect of the change. In contrast, U.S. GAAP require
disclosure of any changes accounting policies in the in current interim period in comparison to:
(1) the comparable interim period of the previous year, (2) the preceding interim periods in the
current year, and (3) the previous annual report.

INI YG HALAMAN 750 SAMPE 751 RULLY

3. Inventory losses from market declines should be recognized in the interim period which the
decline occurs. Subsequent recoveries of these losses in interim periods should be recognized as
gains to the extent of losses previously recognized in interim periods of the same fiscal period.
However, market declines that are expected to be temporary within the fiscal year need not be
recognized.
4. Companies that use standard cost for determining inventory and product cost should generally
follow the procedures reporting variances that are used for fiscal year. Purchase price and
volume variances that are expected to be absorbed by the end of the annual period should
ordinarily be deferred at interim reporting dates. Unplanned purchase price and volume
variances, however, should be reported at the end of the interim period by the procedures used
at the end of the fiscal year.
All other Costs and Expenses. The Board concluded that, in accounting for costs and
expenses that are not allocated to products sold or to services rendered, the following standards
to services should apply:
1. Costs and expenses other than product costs should be charged to income in interim periods
as incurred, or be allocated among interim periods based on an estimate of time expired, benefit
received or activity associated with the periods. Procedures adopted for assigning specific cost

and expense items to an interim period should be consistent with the bases followed by the
company in reporting results of operations at annual reporting dates. However, when a specific
cost or expense item charged to expense for annual reporting purposes benefits more to those
than one interim period, the cost or may be all interim expense item periods.
2. Some costs and expenses incurred in an interim period cannot be readily identified with the
activities or benefits of other interim periods and should be charged to the interim period in
which incurred. Disclosure should be made as to the nature and amount of such costs unless
items of a comparable nature are included in both the current interim period and in the
corresponding in period of the preceding year.
3. Arbitrary assignment of the amount of such costs to an interim period should not be made.
4. Gains and losses that arise any interim period similar to those that would not in within be
deferred at year-end should not be deferred to later interim periods the same fiscal year.