During the current year, the Jordan family trust, an inter vivos trust, has business income of $220,000. Of this amount, $50,000 is retained in the trust with a joint election….
Explain how this error would be corrected, if at all, in accordance with AASB 108 ‘Accounting Policies, Changes in Accounting Estimates and Errors’.
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?