a) Selection Basis of Accounting Policies and Differences Between Changes in Accounting Policies and Changes in Accounting Estimates

1. Basis of Selecting Accounting Policies: According to IAS 8 “Accounting Policies, Changes in Accounting Estimates, and Errors,” the selection of accounting policies is based on:
   • Specific IFRS: When an IFRS specifically applies to a transaction, event, or condition, the management should apply that IFRS to determine the accounting policy.
   • Judgment: In the absence of a specific IFRS, management should use judgment to develop an accounting policy that provides relevant and reliable information about the effects of transactions, events, or conditions.
2. Difference Between Accounting Policies and Estimates:
   • Accounting Policies: These are the specific principles, bases, conventions, rules, and practices applied by an entity in preparing and presenting financial statements. Changes in accounting policies involve changes in principles, bases, or practices. For example, adopting the revaluation model of IAS 16 (for property, plant, and equipment) where the cost model was previously used is a change in accounting policy.
   • Accounting Estimates: These involve adjustments to the carrying amount of an asset or liability or the amount of the periodic consumption of an asset resulting from new information or new developments. For example, changing the useful life of property, plant, and equipment (PPE) is a change in accounting estimate.