How should I report VAT gains /*** Sales increase originating from prior periods?

Question

My company sells goods in Brazil and recently, the Supreme Court equivalent here judged that a specific tax basis was not constitutional, thus changing the VAT applied and generating some gains from prior periods. Should I report those gains in Retained Earnings / Prior Periods or in the current year P&L? Thanks

Answer 1

Maybe you could simply offset it from the current year liability as it does not meet the IAS 8 definition of a prior year error as there was no information in the prior year concerning the constitutional court ruling.. it is a current year movement.. unless the law was passed in the prior year.  If so, and the amount is material, then you may have to restate.