On 30 June 2018, an error was discovered in the calculation of Cootha Ltd’s liability for

sick leave for the year ended 30 June 2017 in accordance with AASB 119 ‘Employee

Benefits’. In particular, the sick leave liability of $33 000 for the packaging division had

been omitted from the sick leave liability for the entire organisation. The total liabilities at

30 June 2017 were $260 000. The annual end of the reporting period for Cootha Ltd is 30

June and the financial statements were authorised for issue on 22 September 2018. A tax

rate of 30% has been applicable to Cootha Ltd since 2008.

(a) Explain how this error would be corrected, if at all, in accordance with AASB 108

‘Accounting Policies, Changes in Accounting Estimates and Errors’.

(b) Would your answer to (a) change if information became available on 25 September

2018 of a severe bird flu outbreak during the 2017–2018 reporting period that

significantly affected Cootha Ltd’s workforce?