When income or expense arise in the current period as a result of errors or omissions in the preparation of financial statements of previous period(s), then those income or expense items have to be considered as prior period items, classified and accounted accordingly.
What do you mean by errors or omissions, in this case?
Those errors that occur as a result of
- Arithmetical errors
- Wrong application of accounting policies
- Oversight
- Misinterpretation of facts and figures
- Frauds or misuse of information that existed at the time of preparation of financial statements.