Page 237 - F1 Integrated Workbook STUDENT 2018

IAS 2, 8, 10, 34 and IIFRS 8

Exxampple 3

Durring 20X1 Bowie chaanged its acccounting policy withh respect too the
treaatment of bborrowing ccosts that are directlyy attributabble to the cconstructioon
of aa hydro-eleectric poweer station, wwhich is in the coursee of constrruction for use
by Bowie.

In pprevious peeriods, Bowwie had exxpensed suuch costs, in accordaance with the
alloowed treatmment in IASS 23 Borroowing Costts. IAS 23 nnow statess Bowie muust
cappitalise these costs.

Bowwie had boorrowing coosts in 20XX0 amounting to $2,6600 and $55,200 in
perriods prior tto 20X0.

Bowwie’s accounting recoords for 200X1 and 200X0 show:

20X11 20X00
$ $
Proofit from opperations 30,0000 18,0000
Finance cost – – (2,6000)
–––––– ––––––
Proofit before ttax 30,0000 15,4000
Incoome tax (9,0000) (4,6200)
–––––– ––––––
Proofit for the pperiod 21,0000 10,7800

In 220X0 openning retaineed earningss were $200,000 and closing rettained
earrnings weree $30,780. The incomme tax ratee is 30%.

Reqquired:

Shoow how thhe changee in accounting policy will be recordedd in the
finaancial stattements foor the yeaar ended 331 Decembber 20X1.
Commparativees should also be prepared.

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