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Does abc co need to revise previous estimate of bad debts

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Problem 1: PFRS 1 requires first-time adopters to apply their selected accounting policies

a) retrospectively, with no exceptions                 c) prospectively, with no exceptions

b) retrospectively, but with some exceptions        d) prospectively, but with some exceptions

Problem 2: ABCs statement of financial position as of January 1, 20x2 (prepared under previous GAAP ) shows an allowance for bad debts of P456,000. A review of the aging schedule revealed a mathematical mistake. The correct amount should have been P546,000. Does ABC Co. need to revise its previous estimate of bad debts as of January 1, 20x2 (date of transition ) on December 31, 20x3 (end of first PFRS reporting period )?

a) Yes. ABC needs to correct the error. The correction shall be recognized in January 1, 20x2 retained earnings.

b) Yes. ABC needs to correct the error. The correction shall be recognized in 20x3 profit or loss.

c) No. The subsequent receipt of the information is a non-adjusting event after the reporting period.

d) Any of these.

Reference no: EM132757043

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