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Assignment in Interim Reporting

Interim financial reporting provides condensed financial statements on a periodic basis, usually quarterly. It requires a minimum of a statement of financial position, statement of comprehensive income, statement of cash flows, and statement of changes in equity. Estimates are used more than in annual reports. Some jurisdictions require interim reports. There are two views on interim reporting - the integral view treats each interim period as part of the annual period, while the independent view treats each period separately. An interim report includes shortened versions of key financial statements and selected explanatory notes. Basic principles for interim reports include fair presentation, compliance with standards, and consistency.

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Vevien Anne Abarca
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176 views3 pages

Assignment in Interim Reporting

Interim financial reporting provides condensed financial statements on a periodic basis, usually quarterly. It requires a minimum of a statement of financial position, statement of comprehensive income, statement of cash flows, and statement of changes in equity. Estimates are used more than in annual reports. Some jurisdictions require interim reports. There are two views on interim reporting - the integral view treats each interim period as part of the annual period, while the independent view treats each period separately. An interim report includes shortened versions of key financial statements and selected explanatory notes. Basic principles for interim reports include fair presentation, compliance with standards, and consistency.

Uploaded by

Vevien Anne Abarca
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Vevien Anne M.

Abarca BSA-2A Intermediate


Accounting 3

Lesson/Topic: Interim Reporting

1. Explain interim financial reporting.


Interim financial report refers to a financial report that contains either a
complete set of financial statements or a set of condensed financial statements
for an interim period.
A set of condensed financial statements for the current period and
comparative prior period information, example, statement of financial position,
statement of comprehensive income, statement of cash flows, statement of
changes in equity, and selected explanatory notes, is the minimum content. A
statement of financial position at the start of the previous period is also required
in some cases. In general, information contained in the most recent annual
report of the entity is not repeated or updated in the interim report. The interim
report addresses changes that have occurred since the end of the previous
annual reporting period.
The interim report follows the same accounting policies as the most
recent annual report, unless an accounting policy is changed, in which case
special disclosures are required. Assets and liabilities are recognized and
measured for interim reporting on the basis of year-to-date information. While
measurements in both annual financial statements and interim financial reports
are frequently based on reasonable estimates, interim financial report
preparation will generally necessitate a greater use of estimation methods than
annual financial statements.

2. Is it required to prepare interim financial report? Briefly explain.


There are times when interim financial reports must be presented such as
statement of financial position as of the end of the current interim period, may
present for each period a statement or statements of profit or loss, statement of
changes in equity for current financial year and statement of cash flows
cumulatively for the current financial year to date. For an entity whose
business is highly seasonal, financial information for the twelve months up to
the end of the interim period may be useful.

3. Explain the integral view and independent view on interim financial reporting.
In integral view the interim period is considered to be an integral part of
the annual accounting period. As a result, annual expenses that do not occur
specifically during an interim period are accrued within all interim periods based
on management's best estimates. This increased accrual use would almost
certainly result in a slew of accrual changes in subsequent periods to correct
any earlier measurement errors. It also suggests using the estimated annual tax
rate for all interim periods, since if the business is subject to graduated tax rates,
the annual tax rate will differ substantially from the rate in place during the
interim period. However, in independent view, interim period is treated as a
separate reporting period under this methodology, and as such is not associated
with expenses that may arise during other interim periods of the reporting year.
As a result of this way of thinking, an expense that benefits more than one
interim period will be fully recognized in the period in which it is incurred, rather
than being recognized over multiple periods.

4. What are the components of an interim financial report?


An interim financial report must include at least such components, for
example a shortened statement of financial position, a condensed statement or
statements of profit or loss and other comprehensive income, a condensed
statement of changes in equity, a condensed statement of cash flows and
selected explanatory notes. If an organization reports profit or loss items in a
separate statement as defined in paragraph 10A of IAS 1 (as amended in 2011),
interim condensed information from that statement is presented.

5. What are the basic principles in the preparation and presentation of


interim financial statements?
If an organization provides a complete collection of financial
statements for interim reporting purposes (as defined in IAS 1
Presentation of Financial Statements – see chapter 3 of this guide), it
must apply IAS 1 in its entirety. If an organization presents a simplified
collection of financial statements for interim reporting purposes, IAS
1.3 offers the following guidance:
• fair presentation and compliance with IFRSs;
• going concern;
• accrual basis of accounting;
• consistency of presentation;
• materiality and aggregation;
• offsetting; and
• comparative information.

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