Question 1

Section B - Case 2: Single Entity Accounts

**Scenario: AquaHarvest Marine Farms**
AquaHarvest prepares its financial statements for the year ended 30 September 20X6. 
Issue 2: Depreciation on harvesting equipment needs to be charged at 20% reducing balance.

If AquaHarvest decides next year to change its depreciation method for this equipment from reducing balance to straight-line, how is this change classified under IAS 8?

Accepted Answer

Recall IAS 16 rules. A change in depreciation method, useful life, or residual value is always treated as a change in accounting estimate, applied prospectively.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Classifying it as a change in accounting policy, which would require retrospective application.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA FA — Financial Accounting Practice Exam 5

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