Page 243 - F1 Integrated Workbook STUDENT 2018

IAS 2, 8, 10, 34 and IFRS 8

Notes to financial statements (extract)

During 20X4 the entity changed its accounting estimate for economic useful life
of an asset. Previously the asset had a useful economic life of ten years but
due to the asset being used more than originally planned, the life has reduced
to five years as at 1 July 20X3. This resulted in the annual depreciation charge
increasing from $10,000 pa to $14,000 pa.

Explanatory note:

The adjustments are only required to future depreciation charges from the date
of the change, i.e. 1 July 20X3. We do not need to change the depreciation
already charged, so no adjustments will be made to retained earnings b/fwd
and the comparatives will not be changed. Therefore, the SOFP reflects the
historical depreciation of $30,000 charged up-to the date of the change plus
the new charge for the current year of $14,000.

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