Retrospective restatement
On Jan 01, 01, entity E acquired software for CU 5 that was available for use on the same date. The useful life of the software is 5 years. On Jan 01, 01, the cost of the software was capitalized (“Dr Software Cr Cash CU 5”) (IAS 38.24). Mistakenly, no amortization expense was recognized for the software in E”s financial statements as at Dec 31, 01 and Dec 31, 02. This error is discovered when preparing the financial statements as at Dec 31, 03.
Posting status:
|
Jan 01,01 |
Dr |
Software |
5 |
|
|
Cr |
Cash |
5 |
Required
(a) Prepare any necessary entries in E”s financial statements as at Dec 31, 03.
(b) Illustrate the effects of the entries (including the effects of the posting status) on E”s statement of financial position, separate income statement, and statement of changes in equity in simplified presentations of these statements.
E has to present only one comparative period (i.e. the year 02) in its financial statements.