(Learning Objective 2, 5: Understanding annual reports and fi nancial statements reporting requirement) Melvyn Steiner, the new accountant of Stamford Place Ltd, was preparing the company’s financial statements ending 20X6. During the year, the company:

■ Changed the useful life estimates of some assets from 5 to 3 years.

■ Had to account for its investment differently due to the publication of a new IFRS.

■ Changed its accounting policy on expense capitalization.

■ Discovered an error in the 20X5 fi nancial statement.

Melvyn is somewhat unsure of what to do next. He has emailed you, his former accounting professor, for advice.

❙ Requirement Write a reply to Melvyn and offer your guidance on the appropriate treatment of the items.