(Intermediate Accounting 3)

Chapter 2 Statement of Comprehensive Income

Related standard: PAS 1 Presentation of Financial Statements

Learning Objectives
• Prepare a Statement of Profit or Loss and Other
Comprehensive Income.
• Give examples of items of other comprehensive income.
• State the acceptable methods of presenting items of income
and expenses.

INTERMEDIATE ACCTG 3 (by: MILLAN)

Statement of profit or loss and other comprehensive income

• An entity shall present all items of income and expense recognized

in a period:
1. in a single statement of profit or loss and other comprehensive
income; or
2. in two statements: (1) a statement displaying the profit or loss
section only (separate ‘statement of profit or loss’ or ‘income
statement’) and (2) a second statement beginning with profit or
loss and displaying components of other comprehensive income.

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Extraordinary items

• PAS 1 prohibits the presentation of any items of income or expense

as extraordinary items in the in the statement(s) presenting profit or
loss and other comprehensive income or in the notes.

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Other comprehensive income for the period

a. Changes in revaluation surplus

b. Unrealized gains and losses on investments in FVOCI securities
c. Remeasurements of the net defined benefit liability (asset)
d. Gains and losses arising from translating the financial statements
of a foreign operation
e. Effective portion of gains and losses on hedging instruments in a
cash flow hedge

• OCI may be presented either (a) net of tax or (b) gross of tax.

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Reclassification adjustments
• Reclassification adjustments are amounts reclassified to profit
or loss in the current period that were recognized in other
comprehensive income in the current or previous periods.

INTERMEDIATE ACCTG 3 (by:

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Total comprehensive income

• Total comprehensive income comprises all components of

1. Profit or loss; and
2. Other comprehensive income.

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Presentation of Expenses

1. Nature of expense method

2. Function of expense method

• If an entity classifies expenses by function, it shall disclose

additional information on the nature of expenses

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Disclosure of dividends

• Dividends declared by an entity are disclosed either in the (a) notes

or (b) statement of changes in equity.

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Order of presentation of disclosures in the Notes

1. Statement of compliance with PFRSs;

2. Summary of significant accounting policies applied;
3. Supporting information for items presented in the other financial
statements; and
4. Other disclosures.

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 APPLICATION OF CONCEPTS
 

PROBLEM 2: FOR CLASSROOM DISCUSSION

INTERMEDIATE ACCTG 3 (by: MILLAN)

 END

INTERMEDIATE ACCTG 3 (by: MILLAN)