IASB finalised amendments to IAS 8 regarding accounting estimates

On 12 February 2021, the International Accounting Standards Board (IASB) published Amendments to IAS 8 Definition of Accounting Estimates to help entities to distinguish between accounting policies and accounting estimates. The amendments are effective for annual periods beginning on or after 1 January 2023.


The requirements in IFRSs, in particular in IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, make a distinction between how an entity should present and disclose different types of accounting changes in its financial statements. Changes in accounting policies must be applied retrospectively while changes in accounting estimates are accounted for prospectively.

Companies sometimes struggle to distinguish between accounting policies and accounting estimates and enforcers have identified divergent practices and the Interpretations Committee received a request to clarify the distinction. The Interpretations Committee passed the request on to the IASB. An exposure draft of proposed amendments published in September 2017 has now been finalised.


The changes to IAS 8 focus entirely on accounting estimates and clarify the following:

  • The definition of a change in accounting estimates is replaced with a definition of accounting estimates. Under the new definition, accounting estimates are “monetary amounts in financial statements that are subject to measurement uncertainty”.
  • Entities develop accounting estimates if accounting policies require items in financial statements to be measured in a way that involves measurement uncertainty.
  • The Board clarifies that a change in accounting estimate that results from new information or new developments is not the correction of an error. In addition, the effects of a change in an input or a measurement technique used to develop an accounting estimate are changes in accounting estimates if they do not result from the correction of prior period errors.
  • A change in an accounting estimate may affect only the current period’s profit or loss, or the profit or loss of both the current period and future periods. The effect of the change relating to the current period is recognised as income or expense in the current period. The effect, if any, on future periods is recognised as income or expense in those future periods.

The revised Standard lists the following items as examples of accounting estimates:

  • A loss allowance for expected credit losses (IFRS 9 Financial Instruments)
  • The net realisable value of an item of inventory (IAS 2 Inventories)
  • The fair value of an asset or liability (IFRS 13 Fair Value Measurement)
  • The depreciation expense for an item of property, plant and equipment (IAS 16 Property, Plant and Equipment)
  • A provision for warranty obligations (IAS 37 Provisions, Contingent Liabilities and Contingent Assets).

In developing an accounting estimate, an entity uses estimation techniques (for example to estimate the loss allowance for expected credit losses) and/or valuation techniques (for example to measure the fair value of an asset or liability).

Effective date

The amendments are effective for annual periods beginning on or after 1 January 2023 and changes in accounting policies and changes in accounting estimates that occur on or after the start of that period. Earlier application is permitted.

Sources:, IFRS in Focus IFRS in Focus — IASB amends IAS 8

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