International Accounting

Standard 1
Presentation of Financial
Statements
Bhupendra Mantri, FCA,
Kalani & Co., Chartered Accountants,
Jaipur (India)
Mobile: 91 98298 88810
Email: [email protected]
Website: www.kalanica.com
Objective
Basis for presentation
of general purpose
financial statements
to ensure
comparability with the
entitys financial
statements of
previous periods and
with the financial
statements of other
entities
Overall requirements
for presentation of
financial statements,
guidelines for their
structure and
minimum
requirements for their
content
Scope
Financial Statements in accordance with
IFRS
Interim Financial Reporting (IAS 34) Only
Para 15-35 applies
All entities CSF / SFS (IAS 27)
Terminology used suitable for profit oriented
entities
Entities not having equity FS presentation
of members or unitholders interests
List of IFRS
IFRS 1 First Time Adoption of International
Financial Reporting Standards
IFRS 2 Share based Payment
IFRS 3 Business Combination
IFRS 4 Insurance Contracts
IFRS 5 Non current assets held for sale and
discontinued operations
IFRS 6 Exploration for and Evaluation of Mineral
Resources
IFRS 7 Financial Instruments: Disclosure
IFRS 8 Operating Segments
List of IFRS (IAS)
IAS 1 Presentation of Financial Statements
IAS 2 Inventories
IAS 7 Statement of Cash Flows
IAS 8 Accounting Policies, Changes in Accounting
Estimates and Errors
IAS 10 Events after Reporting Periods
IAS 11 Construction Contracts
IAS 12 Income Taxes
IAS 16 Property, Plant and Equipment
IAS 17 Leases
IAS 18 Revenue
IAS 19 Employee Benefits
IAS 20 Accounting for Governemnt Grants and
Disclosure of Government Assistance
List of IFRS (IAS)
IAS 21 The Effect of Changes in Foreign Exchange Rates
IAS 23 Borrowing Costs
IAS 24 Related Party Disclosure
IAS 26 Accounting and Reporting by Retire Benefit Plans
IAS 27 Consolidated and Separate Financial Statements
IAS 28 Investment in Associates
IAS 29 Financial Reporting in Hyperinflationary Economies
IAS 31 Interests in Joint Ventures
IAS 32 Financial Instruments: Presentation
IAS 33 Earnings Per Share
IAS 34 Interim Financial Reporting
IAS 36 Impairment of Assets
IAS 37 Provisions, Contingent Liabilities and Contingent Assets
List of IFRS (IAS)
IAS 38 Intangible Assets
IAS 39 Financial Instruments: Recognition and Measurement
IAS 40 Investment Property
IAS 41 Agriculture
Definitions
General Purpose
Financial
Statements
Those intended to meet the needs of users who are
not in a position to require an entity to prepare
reports tailored to their particular information needs
Impracticable Applying a requirement is impracticable when the entity
cannot apply it after making every reasonable effort do
so.
IFRSs Standards and Interpretations adopted by the IASB. They
comprises: IFRS, IAS, Interpretation by IFRIC, SIC.
Material Omissions
or misstatements
of items
Are materail if they could, individually or collectively,
influence the economic decisions that users make on the
basis of financial statements.
Notes Contain information in addition to that presented in the
statement of financial position, statement of
comprehensive income, separate income statement(if
presented), statement of changes in equity and statement
of cash flows.
Other
comprehensive
income
Comprises items of income and expense (including
reclassification adjustments) that are not recognized in
profit or loss as required or permitted by other IFRSs.
Components of other
comprehensive income
Changes in revaluation surplus (IAS 16 Property, Plant
and Equipment and IAS 38 Intangible Asset)
Actuarial gains and losses on defined benefit plans
recognized in accordance with para 93A of IAS 19
Employee Benefits
Gains and losses arising from translating the financial
statements of foreign operations (IAS 21 The Effects of
Changes in Foreign Exchange Rates
Gain and losses on remeasuring available for sale
financial assets (IAS 39 Financial Instruments:
Recognition and Measurement)
The effective portion of gains and losses on hedging
instruments in cash flow hedge (IAS 39)
Definitions
Owners Are holders of instruments classified as equity.
Profit or Loss Is the total of income less expenses, excluding the
components of other comprehensive income.
Reclassification
adjustments
are amounts reclassified to profit or loss in the current
period that were recognized in the current or previous
periods.
Total Comprehensive
Income
Is the change in equity during a period resulting from
transactions and other events, other than those
changes resulting from transactions with owners in their
capacity as owners.
Total comprehensive income comprises all components
of profit or loss and of other comprehensive income.
Complete set of financial statements
A statement of financial position as at the end of the period
A statement of comprehensive income for the period
A statement of changes in equity for the period
A statement of cash flow for the period
Notes, comprising a summary of significant accounting policies
and other explanatory information
A statement of financial position as at the beginning of the
earliest comparative period
General Features
Fair
presentation and
compliance with
IFRSs
Going Concern
Accrual basis of
accounting
Materiality and
aggregation
Offsetting
Frequency of
reporting
Comparative
Information
Consistency of
presentation
Fair presentation and compliance with IFRS
Financial position, financial performance and cash flow
Explicit and unreserved statement of compliance
Selection and application of Accounting policies (IAS 8),
presenting information to provide relevant, reliable, comparable
and understandable information and Additional Information
Inappropriate Accounting Policies
Fair presentation and compliance with IFRS
Management conclusion about fair presentation
Compliance with IFRS, except departure from particular
requirement to achieve fair presentation
Title of departed IFRS, nature of departure, treatment IFRS
requires, reason why treatment would mislead
Financial effect of the departure on each item
Departure from
IFRS Extreme
Circumstances'
(Disclosure)
Departure from requirement of IFRS in prior period
Title of IFRS, nature of the requirement, reason
The adjustments to each item in the financial statements that
management has concluded would be necessary to achieve
fair presentation
Departure from
IFRS but regulatory
framework prohibits
departure
Going Concern
Assessment of entitys
ability by management
GCB
unless
contrary
intention or
no realistic
alternative
to
liquidation
Disclosure of
Uncertainties
Disclosure
when
financial
statements
are not on
going
concern
basis
Accrual Basis of Accounting
An entity shall
prepare its
financial
statements, except
for cash flow
information using
the accrual basis
of accounting.
Materiality and aggregation
An entity shall
present separately
each material class
of similar items. It
shall present
separately items of a
dissimilar nature or
function unless they
are immaterial.
Offsetting
An entity shall not offset assets and
liabilities or income and expense, unless
required or permitted by an IFRS except:
When offsetting reflects
substance of the transaction
or other event
Detracts from ability of users
both to understand the
transaction, other events and
conditions that have occurred
and to assess the entitys
future cash flows.
Frequency of reporting
At least annually
The reason for using a
longer or shorter period
The fact that amounts
presented in the financial
statements are not
entirely comparable
In case change
in end of
reporting period
and presents
financial
statement for
period longer or
shorter than one
year disclosure
Comparative Information
For all amounts reported in current periods financial statements
except when IFRSs permit or require otherwise
The nature of transaction
The amount of each item or class
of items that is reclassified; and
The reason for reclassification
When the entity
changes the
presentation or
classification of items
Reclassification of
comparative amounts
Disclosure:
The reason for not reclassifying the
amounts;
The nature of adjustments that
would have been made if the
amounts had been reclassified
When impracticable
to reclassify
comparative
amounts, an entity
shall disclose:
Consistency of presentation
It is apparent, following a significant
change in the nature of the entitys
operations or a review of its financial
statements, that another presentation
or classification would be more
appropriate having regard to the criteria
for the selection and appropriation of
accounting policies in IAS 8 or
An IFRS requires a change in
presentation
An entity shall
retain the
presentation
and
classification
of items in
financial
statements
from on
period to the
next unless:
Structure and content
Introduction
Identification of
the financial
statements
Statement of
financial
position
Statement of
comprehensive
income
Statement of
changes in
equity
Statement of
cash flows
Notes
Other
disclosures
Identification of the financial statements
the financial statements and distinguish them from
other information in the same published document
each financial statement and the notes.
An entity shall
clearly identify
The name of reporting entity or other means of
identification, and changes in that information
from the end of the preceding reporting period
Whether the financial statements are of an
individual entity or a group of entities
The date of the end of the reporting period or the
period covered by the set of financial statements
or notes
The presentation currency, as defined in IAS 21;
and
The level of rounding used in presenting amounts
in the financial statements.
Display of
information
prominently,
and repeat it
when
necessary for
the information
presented to be
understandable:
Statement of financial position
Information to be
presented in the
statement of
financial position
Current / non
current distinction
Current assets
Current liabilities
Information to be
presented either in
the statement of
financial position or
in the notes
Information to be presented in the statement of
financial position
Property, plant and
equipment
Investment property Intangible assets Financial asses
Investments
accounted for using
the equity method
Biological assets
Trade and other
receivables
Cash and cash
equivalents
Non current assets
held for sale and
discontinued
operations
Trade and other
payables
Provisions Financial liabilities
Liabilities and assets
for current tax as
defined in IAS 12
Deferred tax
liabilities and
deferred tax assets
as defined in IAS 12
Liabilities included
in disposal group
classified as held for
sale
Non controlling
interests, presented
within equity; and
Issued capital and
reserves attributable
to owners of the
parent
Information to be presented in the
statement of financial position
Additional Line items,
heading and subtotals in the
statement of financial
position when such
presentation is relevant to
an understanding of the
entity
Deferred tax assets
(liabilities) not to be
classified as current assets
(liabilities)
Current / non current distinction
when a presentation based on liquidity
provides information that is reliable
and more relevant.
When exception applies, in order of
liquidity.
Presentation of financial
position by classification
in current and non current
assets, and current and
non-current liabilities
except:
No more than twelve months after the
reporting period, and
More than twelve months after the
reporting period
Disclose amount
expected to be recovered
or settled after more than
twelve months for each
asset and liability line item
that combines amounts
expected to be recovered
or settled:
Current assets
All other assets as non current
The asset is cash or cash equivalent (IAS 7) unless the asset is restricted
from being exchanged or used to settle a liability for at least twelve months
after the reporting period
It expects to realize the asset within twelve months after reporting period;
or
It holds the asset primarily for the purpose of trading;
Entity expects to realize the asset, or intends to sell or consume, in its
normal operating cycle;
Current liabilities
All other liabilities as non current
The entity does not have an unconditional right to defer settlement of
liability for at least twelve months after the reporting period
The liability is due to be settled within twelve months after reporting period;
or
It holds the liability primarily for the purpose of trading;
Entity expects to settle the liability in its normal operating cycle;
Specific Discussion (Para 70-76)
Trade payables, accrual for employees and other operating costs
Normal operating cycle
Other current liabilities financial liabilities, bank overdrafts, current
portion of NCL, dividends payable, income taxes and other non trade
payables Whether due for settlement within twelve months.
Original term of liability, refinance, reschedule agreement after
reporting period
Discretion of entity to refinance / roll over obligation
Breach of provision of long term loan arrangement
Events after the Reporting Period (IAS 1)
Information to be presented either in the
statement of financial position or in the notes
Entity shall disclose, either in the statement of financial position or in the
notes, further sub classification of the line items presented, classified in a
manner appropriate to the entitys operations.
Sub-classification depends on the requirement of IFRSs, size, nature,
functions of the amounts involved.
Information to be disclosed for each class of share capital
Description of the nature and purpose of each reserve within equity
Statement of comprehensive
income
Information to be presented in the statement of
comprehensive income
Profit or loss for the period
Other comprehensive income for the period
Information to be presented in the statement of
comprehensive income or in notes
Analysis of Expenses
Nature of expenses method
Function of expenses method
Statement of Changes in equity
Total comprehensive income for the period
Effect of retrospective application or
retrospective restatement (IAS 8)
Reconciliation between the carrying
amount at the beginning and the end of
the period
Dividend distributed per share
Statement of cash flows IAS 7
Notes
Structure
Disclosure of Accounting Policies
Sources of estimation uncertainty
Capital
Other disclosures
Notes - Structure
Basis of preparation of the financial
statements and the specific accounting
policies
Information required by IFRSs that is not
presented elsewhere in the financial
statements
Information relevant to an understanding
of financial statements
Systemic manner, cross reference
Notes: Disclosure of Accounting Policies
Measurement basis used in preparing the
financial statements
Other accounting policies used that are
relevant to an understanding of FS
Judgments that management has made in
the process of applying the entitys
accounting policies
Notes: Sources of estimation uncertainty
Information about the assumption
Major sources of estimation uncertainty

Capital

An entity shall disclose information that
enables users of its financial statements to
evaluate the entitys objectives, policies and
processes for managing capital
Notes: Other disclosures
An entity shall disclose in the notes:
Dividend proposed or declared
Amount of any cumulative preference dividends
not recognized
Domicile and legal form of the entity, its
country of incorporation and the address of
its registered office
Description of nature of the entitys
operations and its principal activities
Name of the parent and the ultimate parent of
the group