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Commission Regulation (EC) No 1725/2003 of 29 September
2003 adopting certain international accounting standards
in accordance with Regulation (EC) No 1606/2002 of the
European Parliament and of the Council.
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Consistency - alternative methods
Paragraph 11 of IAS 1 (revised 1997), presentations of
financial statements, requires that financial statements
should not be described as complying with International
Accounting Standards unless they comply with all the
requirements of each applicable standard and each applicable
interpretation issued by the Standing Interpretations
Committee. SIC interpretations are not expected to apply to
immaterial items.
Reference: IAS 1 (revised 1997), presentation of financial
statements.
Issue
1. Certain IASC Standards provide an enterprise with an
explicit choice between alternative accounting policies
applied in preparing its financial statements. Some standards
which provide explicit choice of an accounting policy indicate
the manner in which that choice is to be exercised. For
example, IAS 39.104 indicates that an enterprise should choose
one of two policies for the recognition of changes in the fair
value of available-for-sale financial assets, and should apply
the policy selected to all available-for-sale financial assets.
Other standards are silent on the manner of exercising choice.
2. The issue is how the choice of accounting policy should
be exercised in the context of those IASC Standards which
allow an explicit choice of accounting policy but are silent
on the manner of exercising that choice. The fundamental
question is whether, once a choice of policy is made, that
policy should be followed consistently for all items accounted
for under the specific requirements which provide the choice.
Consensus
3. If more than one accounting policy is available under an
International Accounting Standard or Interpretation, an
enterprise should choose and apply consistently one of those
policies, unless the standard or interpretation specifically
requires or permits categorisation of items (transactions,
events, balances, amounts, etc.) for which different policies
may be appropriate. If a standard requires or permits
categorisation of items, the most appropriate accounting
policy should be selected and applied consistently to each
category. (Additional guidance is provided in Appendix A and
Appendix B to this interpretation.)
4. Once the appropriate initial policy has been selected
under the requirements of paragraph 3, a change in accounting
policy should only be made in accordance with IAS 8.42 and
applied to all items or categories of items in the manner
specified in paragraph 3.
Date of consensus: May 1999.
Effective date: This interpretation becomes effective for
annual financial periods beginning on or after 1 July 2000.
Earlier application is encouraged. Changes in accounting
policies should be accounted for according to the transition
requirements of IAS 8.46.
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