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AccountingRecovered File 1
AccountingRecovered File 1
PREVIEW OF CHAPTER 5
Intermediate Accounting
IFRS 2nd Edition
Kieso, Weygandt, and Warfield
5-2
5 Statement of Financial Position
and Statement of Cash Flows
LEARNING OBJECTIVES
After studying this chapter, you should be able to:
1. Explain the uses and limitations of a 6. Prepare a basic statement of cash flows.
statement of financial position. 7. Understand the usefulness of the statement of
2. Identify the major classifications of the cash flows.
statement of financial position. 8. Determine additional information requiring
3. Prepare a classified statement of financial note disclosure.
position using the report and account formats. 9. Describe the major disclosure techniques for
4. Indicate the purpose of the statement of cash financial statements.
flows.
5. Identify the content of the statement of cash
flows.
5-3
STATEMENT OF FINANCIAL POSITION
5-4 LO 1
STATEMENT OF FINANCIAL POSITION
Usefulness
Computing rates of return.
Evaluating the capital structure.
Assess risk and future cash flows.
Assess the companys:
Liquidity,
Solvency, and
Financial flexibility.
5-5 LO 1
STATEMENT OF FINANCIAL POSITION
Limitations
Most assets and liabilities are reported at historical
cost.
Use of judgments and estimates.
Many items of financial value
are omitted.
5-6 LO 1
5 Statement of Financial Position
and Statement of Cash Flows
LEARNING OBJECTIVES
After studying this chapter, you should be able to:
1. Explain the uses and limitations of a 6. Prepare a basic statement of cash flows.
statement of financial position.
7. Understand the usefulness of the statement of
2. Identify the major classifications of the cash flows.
statement of financial position. 8. Determine additional information requiring
3. Prepare a classified statement of financial note disclosure.
position using the report and account formats. 9. Describe the major disclosure techniques for
4. Indicate the purpose of the statement of cash financial statements.
flows.
5. Identify the content of the statement of cash
flows.
5-7
CLASSIFICATION IN THE STATEMENT
5-8 LO 2
CLASSIFICATION IN THE STATEMENT
5-9 LO 2
CLASSIFICATION IN THE STATEMENT
5-10 LO 2
CLASSIFICATION IN THE STATEMENT
A recent survey shows that companies are moving toward reporting current assets first
on the statement of financial position, which is a change from a few years ago.
5-11 LO 2
CLASSIFICATION IN THE STATEMENT
Non-Current Assets
Generally consists of:
Long-term Investments
Intangibles Assets
Other Assets
5-12 LO 2
CLASSIFICATION IN THE STATEMENT
Long-term Investments
1. Securities (bonds, ordinary shares, or long-term notes).
5-13 LO 2
CLASSIFICATION IN THE STATEMENT
Held-for- Current or
Debt Amortized Cost
Collection Non-current
Non-Trading Current or
Equity Fair Value
Equity Non-current
5-14 LO 2
CLASSIFICATION IN THE STATEMENT
5-15 LO 2
CLASSIFICATION IN THE STATEMENT
5-16 LO 2
CLASSIFICATION IN THE STATEMENT
5-17 LO 2
CLASSIFICATION IN THE STATEMENT
Intangible Assets
Lack physical substance and are not financial instruments.
Patents, copyrights, franchises, goodwill, trademarks,
trade names, and customer lists.
5-18 LO 2
Intangible Assets ILLUSTRATION 5-17
Classified Report-Form
Statement of Financial Position
5-19 LO 2
CLASSIFICATION IN THE STATEMENT
Other Assets
Items vary in practice. Can include:
Long-term prepaid expenses
Non-current receivables
5-20 LO 2
CLASSIFICATION IN THE STATEMENT
Current Assets
Cash and other assets a company expects to convert into
cash, sell, or consume either in one year or in the
operating cycle, whichever is longer. ILLUSTRATION 5-5
Current Assets and
Basis of Valuation
5-21 LO 2
CLASSIFICATION IN THE STATEMENT
Inventories
Disclose:
Basis of valuation (e.g., lower-of-cost-or-net realizable
value).
5-22 LO 2
Inventories ILLUSTRATION 5-17
Classified Report-Form
Statement of Financial Position
5-23 LO 2
CLASSIFICATION IN THE STATEMENT
Receivables
Major categories of receivables should be shown in the
balance sheet or the related notes.
5-24 LO 2
Receivables ILLUSTRATION 5-17
Classified Report-Form
Statement of Financial Position
5-25 LO 2
CLASSIFICATION IN THE STATEMENT
Prepaid Expenses
Payment of cash, that is recorded as an asset because
service or benefit will be received in the future.
5-26 LO 2
Prepaid Expenses ILLUSTRATION 5-17
Classified Report-Form
Statement of Financial Position
5-27 LO 2
CLASSIFICATION IN THE STATEMENT
Short-Term Investments
Held-for- Current or
Debt Amortized Cost
Collection Non-current
Non-Trading Current or
Equity Fair Value
Equity Non-current
5-28 LO 2
Short-Term Investments ILLUSTRATION 5-17
Classified Report-Form
Statement of Financial Position
5-29 LO 2
CLASSIFICATION IN THE STATEMENT
Cash
Generally any monies available on demand.
5-30 LO 2
Cash ILLUSTRATION 5-17
Classified Report-Form
Statement of Financial Position
5-31 LO 2
CLASSIFICATION IN THE STATEMENT
Equity
5-32 LO 2
Equity ILLUSTRATION 5-17
Classified Report-Form
Statement of Financial Position
5-33 LO 2
CLASSIFICATION IN THE STATEMENT
Non-Current Liabilities
Obligations that a company does not reasonably expect to
liquidate within the longer of one year or the normal operating
cycle. Three types:
5-34 LO 2
Non-Current Liabilities ILLUSTRATION 5-17
Classified Report-Form
Statement of Financial Position
5-35 LO 2
CLASSIFICATION IN THE STATEMENT
Current Liabilities
Obligations that a company generally expects to settle in its
normal operating cycle or one year, whichever is longer.
Includes:
5-36 LO 2
Current Liabilities ILLUSTRATION 5-17
Classified Report-Form
Statement of Financial Position
5-37 LO 2
5 Statement of Financial Position
and Statement of Cash Flows
LEARNING OBJECTIVES
After studying this chapter, you should be able to:
1. Explain the uses and limitations of a 5. Identify the content of the statement of cash
statement of financial position. flows.
2. Identify the major classifications of the 6. Prepare a basic statement of cash flows.
statement of financial position.
7. Understand the usefulness of the statement of
3. Prepare a classified statement of cash flows.
financial position using the report and 8. Determine additional information requiring
account formats. note disclosure.
4. Indicate the purpose of the statement of cash 9. Describe the major disclosure techniques for
flows. financial statements.
5-38
CLASSIFICATION IN THE STATEMENT
Report form
5-39 LO 3
Statement of
Financial
Position Format
Report Form lists
the sections one
above the other.
ILLUSTRATION 5-17
Classified Report-Form
Statement of Financial Position
5-40 LO 3
5 Statement of Financial Position
and Statement of Cash Flows
LEARNING OBJECTIVES
After studying this chapter, you should be able to:
1. Explain the uses and limitations of a 6. Prepare a basic statement of cash flows.
statement of financial position.
7. Understand the usefulness of the statement of
2. Identify the major classifications of the cash flows.
statement of financial position.
8. Determine additional information requiring
3. Prepare a classified statement of financial note disclosure.
position using the report and account formats.
9. Describe the major disclosure techniques for
4. Indicate the purpose of the statement of financial statements.
cash flows.
5. Identify the content of the statement of cash
flows.
5-41
STATEMENT OF CASH FLOWS
IASB requires the statement of cash flows (also called the cash
flow statement). IASB mensyaratkan pernyataan arus kas (juga
disebut laporan arus kas).
5-42 LO 4
STATEMENT OF CASH FLOWS
Primary Purpose: To provide relevant information about the cash receipts and
cash payments of an enterprise during a period.
LEARNING OBJECTIVES
After studying this chapter, you should be able to:
1. Explain the uses and limitations of a 6. Prepare a basic statement of cash flows.
statement of financial position.
7. Understand the usefulness of the statement of
2. Identify the major classifications of the cash flows.
statement of financial position.
8. Determine additional information requiring
3. Prepare a classified statement of financial note disclosure.
position using the report and account formats.
9. Describe the major disclosure techniques for
4. Indicate the purpose of the statement of cash financial statements.
flows.
5-46 LO 5
5 Statement of Financial Position
and Statement of Cash Flows
LEARNING OBJECTIVES
After studying this chapter, you should be able to:
5-49 LO 6
ILLUSTRATION 5-20
ILLUSTRATION 5-21
5-50
Preparation of Statement of Cash Flows
Menentukan:
5. Kas bersih diperoleh dari (atau digunakan dalam) aktivitas operasi.
6. Kas bersih diperoleh dari (atau digunakan dalam) aktivitas investasi dan
pendanaan.
7. Tentukan perubahan (kenaikan atau penurunan) secara tunai selama
periode tersebut.
5-51 8. Rekonsiliasi perubahan uang dengan awal dan saldo kas akhir. LO 6
Preparing the Statement of Cash Flows
5-52 LO 6
Kas bersih diperoleh dari aktivitas operasi
Kelebihan penerimaan kas atas pembayaran kas
dari aktivitas operasi.
Ditentukan dengan mengubah laba bersih secara
akrual menjadi basis kas.
Tambahkan atau dikurangi dari laba bersih barang-
barang dalam laporan laba rugi yang tidak
mempengaruhi kas.
Membutuhkan analisis terhadap laporan laba rugi
tahun berjalan, laporan posisi keuangan komparatif
dan data transaksi yang dipilih.
5-53
ILLUSTRATION 5-20
5-54 LO 6
ILLUSTRATION 5-20
5-55 LO 6
Preparing the Statement of Cash Flows
5-56 LO 6
ILLUSTRATION 5-23
Investing and
Financing
Activities
Purchased land
for $15,000
(Investing)
5-57 LO 6
ILLUSTRATION 5-23
Investing and
Financing
Activities
Issued ordinary
shares for
$50,000
(Financing)
5-58 LO 6
ILLUSTRATION 5-23
Investing and
Financing
Activities
Paid $14,000 in
dividends
(Financing)
5-59 LO 6
Preparation of Statement of Cash Flows
Question
In preparing a statement of cash flows, which of the following transactions would
be considered an investing activity?
a. Sale of equipment at book value
b. Sale of merchandise on credit
c. Declaration of a cash dividend
d. Issuance of bonds payable.
Dalam menyusun laporan arus kas, manakah dari transaksi berikut yang akan
dianggap sebagai aktivitas investasi?
Sebuah. Penjualan peralatan dengan nilai buku
b. Penjualan barang dagangan secara kredit
c. Deklarasi dividen tunai
5-71
5 Statement of Financial Position
and Statement of Cash Flows
LEARNING OBJECTIVES
After studying this chapter, you should be able to:
1. Explain the uses and limitations of a 6. Prepare a basic statement of cash flows.
statement of financial position.
7. Understand the usefulness of the
2. Identify the major classifications of the statement of cash flows.
statement of financial position.
8. Determine additional information requiring
3. Prepare a classified statement of financial note disclosure.
position using the report and account formats.
9. Describe the major disclosure techniques for
4. Indicate the purpose of the statement of cash financial statements.
flows.
5. Identify the content of the statement of cash
flows.
5-72
Usefulness of Statement of Cash Flows
borrow or
5-73 LO 7
Usefulness of Statement of Cash Flows
Financial Liquidity
ILLUSTRATION 5-26
5-74 LO 7
Usefulness of Statement of Cash Flows
Financial Flexibility
ILLUSTRATION 5-27
5-75 LO 7
Usefulness of Statement of Cash Flows
5-76 LO 7
Usefulness of Statement of Cash Flows
Question
The current cash debt coverage ratio is often used to
assess
a. financial flexibility.
b. liquidity.
c. profitability.
d. solvency.
5-77 LO 7
5 Statement of Financial Position
and Statement of Cash Flows
LEARNING OBJECTIVES
After studying this chapter, you should be able to:
1. Explain the uses and limitations of a 6. Prepare a basic statement of cash flows.
statement of financial position.
7. Understand the usefulness of the statement of
2. Identify the major classifications of the cash flows.
statement of financial position.
8. Determine additional information requiring
3. Prepare a classified statement of financial note disclosure.
position using the report and account formats.
9. Describe the major disclosure techniques for
4. Indicate the purpose of the statement of cash financial statements.
flows.
5. Identify the content of the statement of cash
flows.
5-78
ADDITIONAL INFORMATION
5-80 LO 8
Notes to the Financial Statements
ILLUSTRATION 5-30
Accounting Policies
Inventory
ILLUSTRATION 5-31
Accounting Policies
Intangible Asset
5-81 LO 8
Notes to the Financial Statements
land,
buildings, etc.,
5-82 LO 8
Additional Notes
ILLUSTRATION 5-36
Reconciliation Schedule for
Property, Plant, and Equipment
5-83 LO 8
Notes to the Financial Statements
prepayments, and
other amounts.
5-84 LO 8
Additional Notes
ILLUSTRATION 5-34
Maturity Analysis
for Receivables
5-85
Additional Notes
5-86 LO 8
5 Statement of Financial Position
and Statement of Cash Flows
LEARNING OBJECTIVES
After studying this chapter, you should be able to:
1. Explain the uses and limitations of a 6. Prepare a basic statement of cash flows.
statement of financial position.
7. Understand the usefulness of the statement of
2. Identify the major classifications of the cash flows.
statement of financial position.
8. Determine additional information requiring
3. Prepare a classified statement of financial note disclosure.
position using the report and account formats.
9. Describe the major disclosure
4. Indicate the purpose of the statement of cash techniques for financial statements.
flows.
5. Identify the content of the statement of cash
flows.
5-87
Techniques of Disclosure
Parenthetical Explanations
ILLUSTRATION 5-37
Parenthetical Disclosure
of Shares Issued
5-88 LO 9
Techniques of Disclosure
ILLUSTRATION 5-38
Cross-Referencing and
Contra Items
5-89 LO 9
ADDITIONAL INFORMATION
Other Guidelines
Fair
Offsetting Consistency
Presentation
Other Guidelines
Fair
Offsetting Consistency
Presentation
Other Guidelines
Fair
Offsetting Consistency
Presentation
5-92 LO 9
GLOBAL ACCOUNTING INSIGHTS
5-93
GLOBAL ACCOUNTING INSIGHTS
Relevant Facts
Following are the key similarities and differences between U.S. GAAP and
IFRS related to the statement of financial position.
Similarities
Both U.S. GAAP and IFRS allow the use of the title balance sheet or
statement of financial position. IFRS recommends but does not require the
use of the title statement of financial position rather than balance sheet.
Both U.S. GAAP and IFRS require disclosures about (1) accounting policies
followed, (2) judgments that management has made in the process of
applying the entitys accounting policies, and (3) the key assumptions and
estimation uncertainty that could result in a material adjustment.
Comparative prior period information must be presented and financial
statements must be prepared annually.
5-94
GLOBAL ACCOUNTING INSIGHTS
Relevant Facts
Similarities
U.S. GAAP and IFRS require presentation of non-controlling interests in the
equity section of the statement of financial position.
Differences
U.S. GAAP follows the same guidelines as presented in the chapter for
distinguishing between current and noncurrent assets and liabilities.
However, under U.S. GAAP, public companies must follow U.S. SEC
regulations, which require specific line items. In addition, specific U.S.
GAAP mandates certain forms of reporting for this information. IFRS
requires a classified statement of financial position except in very limited
situations.
5-95
GLOBAL ACCOUNTING INSIGHTS
Relevant Facts
Differences
Under U.S. GAAP cash is listed first, but under IFRS it is many times listed
last. That is, under IFRS, current assets are usually listed in the reverse
order of liquidity than under U.S. GAAP.
U.S. GAAP has many differences in terminology that you will notice in this
textbook. One example is the use of common stock under U.S. GAAP,
which is referred to as share capitalordinary under IFRS.
Use of the term reserve is discouraged in U.S. GAAP, but there is no such
prohibition in IFRS.
5-96
GLOBAL ACCOUNTING INSIGHTS
5-97
GLOBAL ACCOUNTING INSIGHTS
On the Horizon
The IASB and the FASB are working on a project to converge their standards
related to financial statement presentation. A key feature of the proposed
framework is that each of the statements will be organized, in the same format,
to separate an entitys financing activities from its operating and investing
activities and, further, to separate financing activities into transactions with
owners and creditors. Thus, the same classifications used in the statement of
financial position would also be used in the statement of comprehensive
income and the statement of cash flows.
5-98
APPENDIX 5A RATIO ANALYSISA REFERENCE
5-99 LO 10 Identify the major types of financial ratios and what they measure.
APPENDIX 5A RATIO ANALYSISA REFERENCE
5-100 LO 10
APPENDIX 5A RATIO ANALYSISA REFERENCE
5-101 LO 10
APPENDIX 5A RATIO ANALYSISA REFERENCE
5-102 LO 10
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5-103