Keano Limited adopted an accounting policy of capitalising exploration and evaluation expenditure and amortising it to the statement of profit or loss and other comprehensive income over four years. During 2017 the Directors decided that for 2017 and future years all exploration and evaluation expenditure should be written off as incurred. This decision has not resulted from any change in the expected outcome of projects on hand, but rather from a desire to give a fairer presentation of results and financial position.

Movements on Exploration and Evaluation Expenditure Account:

The 2016 financial statements showed:

The retained earnings forthe year ended 31 December 2017 were €1,820,000. This was arrived at after charging exploration and evaluation expenditure of €500,000.
Requirement Show how the change in accounting policy would be reflected in the financial statements of Keano Limited.

Transcribed Image Text:

Expenditure Amortised to SPLOCI - Incurred P/L Year 000 000 2014 400 100 2015 600 250 2016 300 325 2017 500 500