Sample Disclosure – Change In Accounting Policy Of Inventories Valuation Method (29 October 2009)

Change in Accounting Policy – Valuation Method of Inventories

Prior to 1 January 2009, the cost of inventories was determined on the weighted average basis.

The directors consider that the change to the first-in, first-out method gives a fairer presentation of the results and the financial position of the Company. This change in accounting policy has been accounted for retrospectively and the relevant effect of this change is shown below:

Effects on retained earnings:

2009

2008

At 1 January:-

RM

RM

As previously stated

150,000

95,000

Effects of change in accounting policy

(15,000)

(10,000)

As restated

135,000

85,000

Effects on net profit for the year:
Net profit before change in accounting policy

100,000

20,000

Effects of change in accounting policy

(10,000)

(5,000)

Net profit for the year

90,000

15,000

Comparative amount for inventories of the Company has been restated as follows:

Inventories amount as at 31 December 2008

RM

As previously stated

50,000

Effects of change in accounting policy

(15,000)

As restated

35,000

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