The methods that are applied by an entity to arrive at the estimated monetary amounts for items of the financial statements in reflection of the applicable measurement bases. A change that does not affect any of the below is a change in estimation technique:

• Recognition criteria
• Measurement basis
• Method of presentation

In contrast, a change of accounting policy is considered to have taken place where there is a change to any one of the above aspects. Accounting estimations are judgements or assumptions used by a business in applying an accounting policy in case an item in the financial statements cannot be reliably measured because of the uncertainty engulfing the estimation process.

In comparative terms, changes in accounting policies are incorporated as prior-year adjustments, whereas changes in estimation techniques are entirely reflected in the profit and loss account (statement of income) for the year in which a change takes place.