IAS 1

PRESENTATION OF FINANCIAL STATEMENTS

Purpose of Financial Statements
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.

Components of Financial Statements

( a ) Statement of financial position
( b ) Statement of comprehensive income
( c ) Statement of changes in equity
( d ) Statement of cash flows
( e ) Notes of the financial statements
( f ) Statement of financial position as at the beginning of the earliest comparative period when an
entity applies an accounting policy retrospectively or makes a retrospective restatement of items in its
financial statements, or when it reclassifies items in its financial statements.

Management’s Responsibility

The financial statements are basically the responsibility of the company’s management.

Accounting Policies

Accounting policies are the specific principles, bases, conventions, rules, and practices applied by an
entity in preparing and presenting financial statements.

Hierarchy of Accounting Policies

In descending order:

( a ) requirements of an applicable accounting standard or an interpretation

( b ) management judgement/decision that results to relevant and reliable information, considering
( 1 ) requirements and guidance of similar accounting standards and interpretations; and
( 2 ) the definitions, recognition criteria and measurement bases in the Framework.

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 IFRSs

This feature is achieved by

- complying with all the applicable requirements of IFRSs;

- presenting information that meets the qualitative characteristics; and
- providing additional disclosures, when necessary.

An entity whose financial statements comply with IFRS shall make an explicit and unreserved
statement of such compliance in the notes. Financial statements shall not be described as complying
with IFRS unless they comply with ALL the requirements of IFRSs.

Going Concern

An entity preparing IFRS financial statements are presumed to be a going concern. If management has
significant concerns about the entity’s ability to continue as a going concern, the uncertainties must be
disclosed. If management concludes that the entity is not a going concern, the financial statements
should not be prepared on a going concern basis, in which case IAS 1 requires a series of disclosures.

Accrual Basis of Accounting

An entity should prepare its financial statements, except for cash flow information, using the accrual
basis of accounting.

Materiality and Aggregation

Each material class of similar items must be presented separately in the financial statements. Dissimilar
items may be aggregated only if these are individually immaterial.

Offsetting

Assets and liabilities, and income and expenses, may not be offset unless required or permitted by a
Standard or an Interpretation.

Frequency of Reporting

The financial statements should be presented at least annually. When an entity changes the end of its
reporting period and presents financial statements for a period longer or shorter than one year, an
entity shall disclose the reason for using a longer or shorter period and the fact that amounts presented
in the financial statements are not entirely comparable.
Comparative Information

Comparative information shall be disclosed in respect of the previous period for all amounts reported
in the financial statements, both on the face of financial statements and notes, unless another Standard
requires otherwise. If comparative amounts are changed or reclassified, generally restatement and
various disclosures are required.

Consistency of Presentation

The presentation and classification of items in the financial statements shall be retained from one
period to the next unless a change is justified either by a change in the nature of the entity’s operations
or a requirement of a new IFRS.

IDENTIFICATION OF THE FINANCIAL STATEMENTS

The financial statements shall be identified clearly and distinguished from other information in the
same published documents. The following information shall be displayed prominently, and repeated
when it necessary for a proper understanding of the information presented:

( a ) the name of the reporting entity;

( b ) whether the financial statements cover the individual entity or a group of entities;
( c ) the end of the reporting period or the period covered by the financial statements;
( d ) the presentation currency; and
( e ) the level of rounding used in presenting amounts.

REPORTING PERIOD

Financial statements shall be presented at least annually. When an entity’s balance sheet date changes
and the annual financial statements are presented for a period longer or shorter than one year, an entity
shall disclose, in addition to the period covered by the financial statements.

( a ) the reason for using a longer or shorter period; and

( b ) the fact that comparative amounts for the income statements, statements of changes I equity,
statement of cash flows and related notes are not entirely comparable.

PRESENTATION OF ASSETS AND LIABILITIES ON THE STATEMENT OF FINANCIAL

POSITION

An entity shall present current and non-current classification of assets and liabilities, except when a
presentation based on liquidity provides information that is reliable and more relevant. When exception
applies, all assets and liabilities shall be presented broadly in the order of liquidity.

Normal operating Cycle

 When an entity’s normal operating cycle is not clearly identifiable, its duration is assumed to be twelve
months.

Current Assets Defined

Current assets are those that fall under any of the following:

- Expected to be realized in, or for sale or consumption in, the entity’s normal operating cycle
- Held primarily for the purpose trading
- Expected to be realized within twelve months after the reporting period;
- Cash or cash equivalent, unless restricted from being used or exchanged to settle a liability for
at least twelve months after the reporting period.

All other assets are classified as non-current.

Current Liabilities Defined

Current liabilities are obligations meeting any of the following criteria:

- It is expected to be settled in the entity’s normal operating cycle;

- It is held primarily for the purpose trading;
- It is due to be settled within twelve months after the reporting period;
- The entity does not have an unconditional right to defer settlement of the liability for at least
twelve months after the reporting period.

All other liabilities are classified as non-current.

Information on the Face of the Statement of Financial Position

As a minimum, the statement of financial position shall include line items that present the following
amounts:

- Property, plant and equipment

- Investment property
- Intangible assets
- Financial assets, excluding cash, receivables and investment under equity method
- Investments accounted for using the equity method
- Biological assets
- Inventories
- Trade and other receivables
- Cash and cash equivalents
- Trade and other payables
- Provisions
- Financial liabilities, excluding trade and other payables and provisions
- Liabilities and assets for current tax
- Deferred tax liabilities and deferred tax assets
 - Non-controlling interest, which is presented within equity (for consolidated statement of
financial position) and
- Issued capital and reserves attributable to equity holders of the parent.

Additional line items shall be presented when such presentation is relevant to an understanding of
the entity’s financial position. Judgement about whether to present additional line items shall be made
on the basis of the assessment of

( a ) the nature and liquidity of assets

( b ) the functions of assets within the entity; and
( c ) the amounts, nature and timing of liabilities.

STATEMENT OF COMPREHENSIVE INCOME

Formats of Presentation

( 1 ) One-statement format - continuous presentation divided into two parts ( a ) profit or loss and ( b )
other comprehensive income.
( 2 ) Two-statement format- separate statements ( a ) income statement showing components of profit
or loss and ( b ) statement of comprehensive income.

Information to be Presented on the Face of the Statement of Comprehensive Income

- Revenue
- Gains and losses arising from derecognition of financial assets measured at amortized cost
- Finance costs
- Share of the profit or loss accounted for using the equity method
- Gains and losses from reclassification of financial assets
- Tax expense
- Single amount for discontinued operations, comprising
- Post-tax profit or loss from operations of discontinued operations
- Post-tax gain or loss on measurement of assets or post-tax gain or loss on sale of discontinued
operations
- Profit or loss
- Each component of other comprehensive income classified by nature
- Share of other comprehensive income of associates and joint ventures accounted for using the
equity method
- Total comprehensive income

The following items shall be disclosed on the face of the statement of comprehensive as allocations of
profit or loss and total comprehensive income for the period:

- attributable to non-controlling interest; and

- attributable to owners of the parent

Expenses should be analyzed and presented either by nature (raw materials, staffing costs,
depreciation, etc.) or by function (cost of sales, selling, administrative, etc.)
 If an enterprise categorizes by function, additional information on the nature of expenses, at a
minimum - depreciation, amortization, and staff costs, must be disclosed.

An entity shall not present any items of income and expense as extraordinary items, either on the face
or in the notes.

Components of other comprehensive income shall be presented either net of related income tax or
before related tax effects with one amount shown for the aggregated amount of income tax relating to
those components.

Reclassification adjustments from other comprehensive income to profit or loss shall be presented
either in the statement of comprehensive income or in the notes. Entities presenting reclassification
adjustments in the notes present the components of other comprehensive income after any related
classifications adjustments.

STATEMENT OF CHANGES IN EQUITY

The statements must show:

- total comprehensive income for the period showing separately amounts owing to the owners
of the parent and to non-controlling interest;
- for each component of equity; the effect of retrospective application or retrospective
restatement as a result of changes in accounting policy or correction of prior period errors;
- for each component of equity, a reconciliation of the carrying amount at the beginning and the
end of the period, separately disclosing profit or loss, each item of other comprehensive income and
transactions with owners in their capacity as owners.

The amount of dividends recognized as distribution to owners shall be presented either in the statement
of changes in equity or in the notes.

NOTES TO THE FINANCIAL STATEMENTS

The notes must-

- present information about the basis of preparation of the financial statements and the specific
accounting policies used;
- disclose any information required by the IFRSs that is not presented on the face of the
statement of financial position, income statement, statement of changes in equity or cash flow
statement; and
- provide additional information that is not presented on the face of the statement of financial
position, income statement, statement of changes in equity or cash flow statement that is deemed
relevant to an understanding of any of them.

Notes should be cross-referenced from the face of the financial statements to the relevant notes.

IAS 1 suggests that the notes be presented in the following order:

 ( 1 ) a statement of compliance with PFRSs;
( 2 ) a summary of significant accounting policies applied, including
( a ) the measurement basis bases used in preparing the financial statements
( b ) the other accounting policies used that are relevant to an understanding of the
financial statements.
( 3 ) supporting information for items presented on the face of the financial statements, in the
order in which each statement and each line item is presented; and
( 4 ) other disclosures, including
( a ) contingent liabilities and unrecognized contractual agreement
( b ) nonfinancial disclosures, such as the entity’s financial risk management objectives
and policies. IAS 1 also requires disclosure of judgements, key sources of estimation and basis
for resolving uncertainty.