PAS 1

PRESENTATION OF FINANCIAL STATEMENTS

I. PAS 1 Presentation of Financial Statements
A. Prescribes the basis for the presentation of general-purpose financial statements,
guidelines for their structure
B. Its minimum requirement for their content is to ensure comparability
1. Intra-comparability (horizontal)
2. Inter-comparability (dimensional)
II. Financial Statements
A. Definition
1. Are the structured representation of an entity's financial position and results of
its operations
2. Are the end product of the financial reporting process and the means by which
the information gathered and processed is periodically communicated to users
3. General purpose financial statements are 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.

B. Purpose
1. To provide information about the financial position, financial performance, and
cash flows of an entity that is useful to a wide range of users in making
economic decisions.
2. To show the results of management's stewardship over the entity's resources.

C. Complete Set
1. Statement of financial position
2. Statement of profit or loss and other comprehensive income;
3. Statement of changes in equity
4. Statement of cash flows
5. Notes
a. Comparative information
6. Additional statement of financial position (only when the following instances
occur)
a. The entity applies an accounting policy retrospectively, makes a
retrospective restatement of items in its financial statements, or
reclassifies items in its financial statements;
b. The instance in (a) has a material effect on the information in the
statement of financial position at the beginning of the preceding period.

D. General Features
1. Fair Presentation and Compliance with PFRSs
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PRESENTATION OF FINANCIAL STATEMENTS
a. PAS 1 requires an entity whose financial statements comply with PFRSs
to make an explicit and unreserved statement of such compliance in the
notes if it complies with all the requirements of PFRSs.
b. PAS 1 permits a departure from a PFRS requirement (if the relevant
regulatory framework requires or allows it) should an entity’s
management conclude that compliance with a PFRS requirement is
misleading.
2. Going concern
a. Financial statements are normally prepared on a going concern basis
unless the entity has an intention to liquidate or has no other alternative
but to do so.
b. When preparing financial statements, management shall assess the
entity's ability to continue as a going concern at least, but not limited to,
12 months from the reporting date.
3. Accrual Basis of Accounting
a. All financial statements shall be prepared using the accrual basis of
accounting except for the statement of cash flows which is prepared
using cash basis.
4. Materiality and Aggregation
a. Each material class of similar items (line item) is presented separately.
b. Dissimilar item are presented separately unless they are immaterial.
Individually immaterial items are aggregated with other items.
5. Offsetting
a. Offsetting is usually prohibited; it is only permitted when it reflects the
substance of the transaction (e.g., presenting gains or losses from sale of
assets net of selling expenses)
6. Frequency of reporting
a. Financial statements are prepared at least annually.
b. If entity changes its reporting period to a period longer shorter than one
year, it shall disclose the following:
i. The period covered by the financial statements
ii. The reason for using a longer or shorter period
iii. The fact that amounts presented in the financial statements are not
entirely comparable.
7. Comparative Information
a. PAS 1 requires an entity to present comparative information in respect
of the preceding period for all amounts reported in the current period's
financial statements, unless another PFRS requires otherwise.
8. Consistency of presentation
a. The presentation and classification of items in the financial statements is
retained from one period to the next unless a change in presentation:
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PRESENTATION OF FINANCIAL STATEMENTS
i. is required by a PFRS; or
ii. results in information that is reliable and more relevant.

E. Structure and Content (the following shall be presented)

1. The name of the reporting entity
2. Whether the statements are for the individual entity or for a group of entities
3. The date of the end of the reporting period or the period covered by the
financial statements
4. The presentation currency
5. The level of rounding used (e.g., thousands, millions, etc.)

F. Management Responsibility
1. the preparation and fair presentation of financial statements in accordance
with PFRSs.;
2. internal control over financial reporting;
3. going concern assessment;
4. oversight over the financial reporting process; and
5. review and approval of financial statements.

III. Statement of Financial Position

A. Definition
1. it shows the entity’s financial condition as at a certain date

B. Presentation
1. Classified (current and noncurrent)
a. PAS 1 encourages this method unless unclassified presentation provides
a more reliable and relevant information
2. Unclassified (based on liquidity)
3. PAS 1 permits the use of mixed presentation for entities that has diverse
operations.

C. Current assets – are assets that are:

1. Expected to be realized, sold, or consumed in the entity's normal operating
cycle;
2. Held primarily for trading;
3. Expected to be realized within 12 months after the reporting period; or
4. Cash or cash equivalent, unless restricted from being exchanged or used to
settle a liability for at least twelve months after the reporting period.

D. Current Liabilities - are liabilities that are:

1. Expected to be settled in the entity's normal operating cycle;
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PRESENTATION OF FINANCIAL STATEMENTS
2. Held primarily for trading
3. Due to be settled within 12 months after the reporting period; or
4. The entity does not have the right at the end of the reporting period to defer
settlement of the liability for at least twelve months after the reporting period.

E. Currently maturing Long-term liabilities

1. General rule: Classified as current.
2. Exceptions: Noncurrent if the entity has the right, at the end of the reporting
period, to roll over the obligation for at least twelve months after the reporting
period under an existing loan facility (Refinancing agreement)
a. Refinancing means replacement of an existing debt with a new one but
with different terms.

F. Long term agreement becomes payable on demand (as a result of breach)

1. General rule: Classified as current.
2. Exceptions: Noncurrent if the lender provides the entity by the end of the
reporting period (e.g., on or before) a grace period ending at least twelve months
after the reporting period

IV. Statement of Profit or Loss and Other Comprehensive Income

A. Presentation
1. A single statement of profit or loss and other comprehensive income (statement
of comprehensive income)
2. Two statements - (1) a statement of profit or loss (income statement); and (2) a
statement presenting comprehensive income
3. PAS 1 requires an entity to present information on the ff:
a. Profit or loss
b. Other comprehensive income
c. Comprehensive income
4. PAS 1 prohibits the presentation of extraordinary items in the statement of
profit or loss and other comprehensive income or in the notes.

B. Presentation of Expenses
1. Nature of expense method (e.g., depreciation)
2. Function of expense method (e.g., administrative expenses)
a. if used, must be presented with additional disclosures on the nature of
expenses

C. Other Comprehensive Income

1. Definition
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PRESENTATION OF FINANCIAL STATEMENTS
a. Comprises items of income and expense (including reclassification
adjustments) that are not recognized in profit or loss as required or permitted
by other PERS.
b. Reclassification adjustments - are amounts reclassified to profit or loss in the
current period that were recognized other comprehensive income in the
current or previous periods.
2. Presentation
a. Those for which reclassification adjustment is allowed;
i. Translation differences on foreign operations
ii. Effective portion of cash flow hedges
b. Those for which reclassification adjustment is not allowed.
i. Changes in revaluation surplus
ii. Remeasurements of the net defined benefit liability (asset)
iii. Fair value changes in FVOCI
- equity instrument (election)
c. Items of OCI, including reclassification adjustments, may be presented at
either net of tax or gross of tax

D. Total Comprehensive Income

1. 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

V. Statement of Changes in Equity

A. Presents the following information:
1. Effects of change in accounting policy or correction of prior period error
2. Total comprehensive income for the period
3. For each component of equity, a reconciliation between the carrying amount
at the beginning and the end of the period, showing separately changes
resulting from:
i. profit or loss;
ii. other comprehensive income;
iii. transactions with owners
B. Others
1. PAS 1 allows the disclosure of dividends, and the related amount per share,
either in the statement of changes in equity or in the notes.

VI. Statement of Cash Flows

A. PAS 1 refers the discussion and presentation of statement of cash flows to PAS 7
Statement of Cash Flows.
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PRESENTATION OF FINANCIAL STATEMENTS
VII. Notes
A. Is an integral part of the financial statements
B. It presents
1. information regarding the basis of preparation of financial statements
2. information required by the PFRS
3. other information not required by PFRSs but is relevant to users of financial
statements.

OPPUS, CRISTINE JANE, G.