Amendments to IAS 8 on accounting estimates

Keywords: Mazars, Thailand, IFRS, IAS 8, Accounting estimates, IASB, IFRS 13, IFRS 9

07 April 2021

The amendments aim to clarify the distinction between accounting policies and accounting estimates. However, they focus exclusively on accounting estimates, which are henceforth defined as “monetary amounts in financial statements that are subject to measurement uncertainty”. Some typical examples of accounting estimates are also provided.

The amendments state that an accounting policy may require line items in financial statements to be measured in a way that involves measurement uncertainty; in other words, the accounting policy may require these items to be measured at monetary amounts that cannot be observed directly and must instead be estimated. In this situation, the entity develops an accounting estimate to achieve the objective set out by the accounting policy.

The IASB’s amendments to IAS 8 also clarify that:

• to develop an accounting estimate, an entity uses measurement techniques and inputs (e.g. techniques used to measure a loss allowance for expected credit losses in accordance with IFRS 9, or to measure the fair value of an asset or liability in accordance with IFRS 13);
• the impacts on accounting estimates of a change in an input or a change in a measurement technique are changes in accounting estimates, unless they result from the correction of prior period errors.

The amendments to IAS 8 are applicable prospectively for financial periods commencing on or after 1 January 2023; early application is permitted.