Explain the accounting treatment for prior period errors

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Reference no: EM132797816

Question - Net Income Retained Earnings (ending balance)

MLM Bhd started operations on 1 January 2015 and has used the FIFO method of inventory valuation since its operation. In 2018, the company decides to switch to the average cost method. The following table presents the effects of the change in inventory valuation method:

Year FIFO Average Cost FIFO RM RM RM

2015 175,000 157,000 260,000

2016 205,000 210,000 575,000

2017 300,000 293,000 590,000

2018 305,000 620,000 780,000

REQUIRED -

(a) Restate the beginning retained earnings balance as at 1 January 2018.

(b) Explain the accounting treatment for prior period errors in accordance to MFRS 108 Accounting Policies, Changes in Accounting Estimates and Errors.

(c) Briefly explain the accounting treatment for adjusting events and non-adjusting events after the reporting period in accordance to MFRS 110 Events After the Reporting Period.

Reference no: EM132797816

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