Question
The unadjusted trial balance of Dovetail Services at December 31, 2025 (2025 depreciation not yet recorded; 2024 financial statements already issued) is shown below. Account Debit Credit Cash 18,300 Accounts Receivable 22,000 Allowance for Doubtful A
Statements in this challenge
- Correcting and Adjusting EntriesJournal Entry
- Adjusted Trial BalanceTrial Balance
Scoring
- 40% Account naming / line matching
- 40% Amount correctness
- 20% Structure / section placement
IAS 8 — Accounting Policies, Changes in Accounting Estimates and Errors
Classify the change before accounting for it. A change of accounting policy is applied retrospectively with comparatives restated; a change in an accounting estimate is applied prospectively from the date of change, with nothing restated.
Common mistakes
- Restating comparatives for what is really a change in estimate, such as a revised useful life.
- Applying a policy change prospectively when retrospective application is required and practicable.
- Omitting the adjustment to the opening balance of retained earnings on a retrospective change.
Further readingIAS 8: policies vs estimates vs errors