Chapter 3 IAS 1 PRESENTATION OF FINANCIAL

STATEMENTS
Monday, August 23, 2021
6:57 PM
Overall Considerations:
1. Fair Presentation
2. Offsetting -
Income and expenses can be offset only when:
• An IFRS requires/permits it, or
• Gains, losses and related expenses arising from the same/similar transactions are not
material.
3. Going Concern -
When FS not prepared on a going concern basis, it shall be disclosed with:
a. Basis of the FS
b. Reason why
4. Comparative Information -
A third SFP is required if the entity RETROSPECTIVELY applies an accounting policy,
restates item, or reclassifies item, and adjustments had a material effect
5. Consistency of Preparation -
Shall be retained from period to next, unless:
a. Resulted in more appropriate application of accounting policies
b. Required by new IFRS
6. Frequency of Reporting - annually
7. Accrual Basis of Accounting
8. Materiality and Aggregation
 
IAS 1 also requires disclosure of the following information in a prominent position:
a. Name of the reporting entity (or other means of identification).
b. Cover the single entity only or a group of entities.
c. The date of the end of the reporting period or the period
d. The presentation currency.
e. The level of rounding.
 
STATEMENT OF FINANCIAL POSITION
N1: Current Asset - should be classified when:
a. Held to be realized within the 12 mos. of end of the reporting period or for consumption
in the normal course.
b. Primarily for trading purposes.
c. Cash or cash equivalents UNLESS restricted from being exchanged or to settle liab due
for 12 mos.
 
N2: Current Liability - should be classified when:
a. To be settled within the normal course
b. Held primarily for trading
c. Due to be settled within 12 mos. after the end of the reporting period
 d. Entity does not have unconditional right to defer settlement of the liability for 12 mos.
after the end of the reporting period.
 
*When long-term debt is expected to be refinanced under an existing loan facility, and the
entity has the discretion, the debt is classified as non-current even if due within 12 months.
 
*If a liability has become payable on demand on or before the Statement of Financial
Position date (following breach of covenants) the liability is current even if the lender has
agreed, after the reporting period date and before authorization of the accounts not to
demand payment as a consequence of the breach.
 
Any other line items, depends on judgements based on the assessment of the following
factors:
o Nature and liquidity of assets and their materiality. Thus goodwill and assets arising
from development expenditure will be presented separately, as will monetary/non-
monetary assets and current/non-current assets.
o Function within the entity. Operating and financial assets, inventories, receivables and
cash and cash equivalents are therefore shown separately.
o Amounts, nature and timing of liabilities. Interest-bearing and non-interest-bearing
liabilities and provisions will be shown separately, classified as current or non-current as
appropriate.
 
*Separate presentation for different measurement bases (e.g. PPE - held at cost or revalued
amount)
 
Information either in SOFP or Notes to the FP
a. Sub-classification of line items or class of asset
b. Each class of share capital
c. Each reserve within equity
 
STATEMENT OF PROFIT AND LOSS & OTHER COMPREHENSIVE INCOME
May be presented either:
a. Single SOPL and OCI
b. Two statements:
i. Single SOPL and OCI
ii. Second statement beginning P/L and displaying components of OCI
 
The SOPL & OCI shall include line items that present the following amounts for the
period:
 revenue;
 finance costs;
 share of the profit or loss of associates and joint ventures accounted for using the equity
method;
 tax expense;
 a single amount comprising the total of:
o the post-tax profit or loss of discontinued operations and       
 o the post-tax gain or loss recognized on the measurement to fair value less costs to
sell or on the disposal of assets or disposal group(s) constituting the discontinued
operation;
 profit or loss;
 each component of other comprehensive income classified by nature (excluding amounts
in next point);
 share of the other comprehensive income of associates accounted for using the equity
method; and total comprehensive income.
 
Structure:
P/L
+ Revenue
— Cost of Sales
  Gross Profit
+ Other Income
— Distribution Costs
— Admin. Expenses
— Other Expenses
— Finance Cost
  Profit before tax
— Income tax Expense/Interest Expense
+ Profit After Tax
+ Profit for continuing operations
— Loss for discontinued operations
+ Profit/Loss for the Year
 
 
OCI
+/— Gain/Loss on Property Revaluation
+/— Gain/Loss on Valuation of Investment at FVTOCI
— Deferred tax on Revaluation
  Other Comprehensive Income for the year, net of tax
  Total Comprehensive Income
 
STATEMENT OF CHANGES IN EQUITY
 

 
N1: Dividends
- comprises of interim dividend paid & dividend declared BEFORE reporting period
- dividend declared after reporting period – only disclosed in the notes (IAS 10)
 
N2: Transfer to Retained Earnings
- due to excess depreciation adjustment or realization of revaluation surplus for non-
current asset disposed off during the year (IAS 16)
 
STATEMENT OF CASH FLOW
 basis to assess the ability of the entity to generate cash & cash equivalents and the needs
of the entity to utilize those cash flows.
 
NOTES TO THE FINANCIAL STATEMENTS
Certain Order acc. to IAS 1
i. Statement of compliance with IFRS
ii. Summary of significant accounting policies applies
a. Measurement basis
b. Other accounting policies applies
ii. Supporting info for items
a. More detailed analysis or breakdowns of figures
b. Narrative info explaining figures
ii. Other disclosures
a. Contingent liab, commitments & other financial disclosures
 b. Non-financial disclosures
c. Objectives & policies
 
List some specific disclosures acc to IAS 1:
i. Domicile and legal form of entity
ii. Description of the nature of the entity's operations and its principal acts
iii. Name of the parent entity and the ultimate parent entity of the group