In plain words
Companies sometimes change an accounting policy, revise an estimate such as an asset's useful life, or discover an error in last year's figures. IAS 8 sets the treatment: policy changes generally apply retrospectively, estimate changes apply prospectively from now on, and material prior-period errors are corrected by restating comparatives unless that is impracticable. With IFRS 18, IAS 8 is renamed and takes over some requirements from IAS 1.
Why it matters
IAS 8 governs how to select and apply accounting policies, how to account for changes in policies and estimates, and how to correct prior-period errors, relevant to every entity over time. With IFRS 18, IAS 8 is renamed "Basis of Preparation of Financial Statements" and absorbs some requirements moved from IAS 1.
Diagnostic questions
Have you changed an accounting policy, revised an estimate, or discovered an error from a prior period?
Recognition
Apply policies consistently. Changes in accounting policy are generally applied retrospectively; changes in accounting estimates are applied prospectively.
Measurement
Correct material prior-period errors retrospectively by restating comparative amounts, unless it is impracticable to do so.
Presentation & disclosure
Disclose the nature and amount of changes in estimates, and for policy changes or error corrections the reason and the effect on each affected line item.
Common mistakes
Treating a change in estimate as a change in policy (or vice versa); adjusting the current period only when retrospective restatement is required.
Simple example
A company revises the useful life of equipment (a change in estimate, applied prospectively) while correcting a prior overstatement of revenue by restating last year's comparatives.
Professional judgment
Distinguishing a change in estimate from a change in policy, and assessing whether an error is material, require judgement.
Source basis
IAS 8 · Accounting Policies, Changes in Accounting Estimates and Errors
Paragraph references
Verified against the official standard texts used in the IFRS Expert skill.
Related issues
Educational and navigation content only. Not professional advice. Does not reproduce official IFRS/IAS text. Consult the authoritative standards and qualified professionals; professional judgment may still be required.