Topic: Accounting for Prior Years Adjustments Example 1: Changes in Accounting Policy

SMN Bhd. until now has valued inventory using LIFO method. However, following changes to MFRS 102 Inventories, the use of LIFO method has been disallowed. Therefore, the company intends to use FIFO method for the valuation of the company's inventory. Following are extracts of SMN Bhd.s most recent financial statements before the application of FIFO method.

Assume that the management estimate the following inventory using FIFO:

	2018	2017	2016
Inventory	12	13	10

Also, assume that the management believes that the valuation of inventory using FIFO method for period prior to 2016 would produce materially similar results. Assume tax is at 25%.

How to treat this accounting for prior years adjustments?