Change in Accounting Policy – Valuation Method of Inventories
Prior to 1 January 2009, the cost of inventories was determined on the weighted average basis.
The directors consider that the change to the first-in, first-out method gives a fairer presentation of the results and the financial position of the Company. This change in accounting policy has been accounted for retrospectively and the relevant effect of this change is shown below:
| Effects on retained earnings: |
2009 |
2008 |
| At 1 January:- |
RM |
RM |
| As previously stated |
150,000 |
95,000 |
| Effects of change in accounting policy |
(15,000) |
(10,000) |
| As restated |
135,000 |
85,000 |
| Effects on net profit for the year: | ||
| Net profit before change in accounting policy |
100,000 |
20,000 |
| Effects of change in accounting policy |
(10,000) |
(5,000) |
| Net profit for the year |
90,000 |
15,000 |
Comparative amount for inventories of the Company has been restated as follows:
|
Inventories amount as at 31 December 2008 |
RM |
|
As previously stated |
50,000 |
|
Effects of change in accounting policy |
(15,000) |
|
As restated |
35,000 |