Friday, January 7, 2011

(231)-EXTRAORDINARY ITEMS AND PRIOR YEAR ADJUSTMENTS

Extraordinary Items and Prior Year Adjustments


Prior Year Adjustments


Prior year adjustments are those material adjustments applicable to prior year arising from changes in accounting policies or from the correction of fundamental errors. They do not include normal recurring corrections or adjustments of accounting estimates made in prior years.
  • Changes in accounting policy
Examples could include policy changes by a company regarding depreciation of building, deferred tax, goodwill or finance leases.
  • Correction of fundamental errors
This refers to errors which are of such fundamental importance as to affect the true and fair view. Had the errors been recognised at the time they occurred, the financial statements would have been withdrawn and subsequently amended.


Reserve movements


the term "reserve movements" refers to items which are taken direct to reserves rather than passed through the profit and loss account. One purpose of SSAP was to restrict the use of reserve movements.

Reserve movements may be required or permitted in the following circumstances:
  • Changes in value of investment properties
  • Certain exchange differences required to be taken direct to reserves by SSAP
  • immediate write-off against reserves
  • amounts required by law to be charged direct to the share premium account
  • Sale of previously revalued assets

Disclosure requirements of SSAP


SSAP made it very clear that the following items should be separately disclosed in the profit and loss account and dealt with in the following order;
  • Profit and loss on ordinary activities
  • Extraordinary profit or loss
  • Profit or loss for the financial year
  • Dividends and other appropriations

7 comments:

  1. I don’t know how should I give you thanks! I am totally stunned by your article. You saved my time. Thanks a million for sharing this article.

    ReplyDelete
  2. Great post. Keep it up. Thanks for advice. It is wonderful information for me. Please visit http://goo.gl/xypLhe

    ReplyDelete
  3. Hello everyone! Friends call me Alex so you can also. I work as a nurse in local clinic nearby my home.proessaywriting Always after work I go swimming - I consider physic activity to be very important part of life.

    ReplyDelete
  4. I certainly agree to some points that you have discussed on this post. I appreciate that you have shared some reliable tips.

    ReplyDelete
  5. Great Post!! Thanks for share it information about Accounts and ssap. Its very helpful.

    ReplyDelete
  6. Very informative, keep posting such good articles, it really helps to know about things.

    ReplyDelete
  7. What you're saying is completely true. I know that everybody must say the same thing, but I just think that you put it in a way that everyone can understand. I'm sure you'll reach so many people with what you've got to say.

    ReplyDelete