INTERNATIONAL

FINANCIAL ACCOUNTING 2
CHAPTER 3:

PRESENTATION OF FINANCIAL
STATEMENT (IAS1)

Lecturer : Tang Thanh Minh Xuan

 LEARNING OBJECTIVES
Knowledge
The features of financial statement, structure and
content of financial statement

Skill
Presenting financial statement

Attitude

Understand purpose of financial statement

CONTENTS
Financial statement
Objective, Purpose of
financial statement
General features
Structure and content
Statement of financial position
Statement of profit or loss and other
comprehensive income
Statement of changes in equity
Notes
3.1 FINANCIAL STATEMENT
Objective
An entity communicates its financial
information to external parties through
financial statement

How are information in financial

statement presented ?
3.1 FINANCIAL STATEMENT
Objective
Set out overall
requirements,
IAS 1 prescribes
guidelines for
the basis for
structure,
presentation
minimum
financial
requirements for
statement
content…
3.1 FINANCIAL STATEMENT
Objective
Aggregate information in financial
statement on the basis of shared
characteristics

Ensure comparability both

with the entity’s financial
statement of previous periods
and with the financial
statement of other entities
3.1 FINANCIAL STATEMENT
Purpose of financial statement

Provide information about an entity’s

financial position, cash flow for end
user making economic decision
3.1 FINANCIAL STATEMENT
General features

In accordance with IFRS, Financial

statements should be presented fairly. Fair
presentation means faithful representation
of effects of transactions, other events in
accordance with the definitions and
recognition criteria for asset, liabilities,
income and expense. exactly
3.1 FINANCIAL STATEMENT
Financial statement should
1)
prepared on a going concern
Going basis unless management
concern intends to liquidate or cease
trading

2) Transactions and events are

recoignized when they occur
Accrual (not when cash is received or
basis paid)
3.1 FINANCIAL STATEMENT
Present separately each
3) Materiality material class of similar
and items; if a line item is not
aggregation individually material, it is
aggregated with other
items…

Assets and liabilities or

4) Offsetting income and expense may
not be offset against each
other…
3.1 FINANCIAL STATEMENT
5) Present a complete set of
Frequency financial statement at least
of reporting annually

6) The presentation and

Consistency classification of items
of should be consistent from
one period to the next.
presentation
3.1 FINANCIAL STATEMENT

7) Compare the financial

statement of an entity
Comparative
through time, to identify
information trends in its financial
position
3.2 Structure and content
Statement of financial position

The statement of financial position is a

statement that presents an entity’s assets,
liabilities and equity at a given point in time
3.2 Structure and content
Statement of financial position

The standard express a preference for a

presentation based on the current/noncurrent
distinction, but allows a presentation by
liquidity if that is more reliable and relevant
3.2 Structure and content
Classification of assets
Expected to be realized
or held for sale or Held primarily for
consumption in normal trading purposes
course of operating
cycle
Current
asset
Expected to be realized Cash or cash equivalent
within twelve months asset that is not
of the end of the restricted in its use.
reporting period
3.2 Structure and content
Classification of assets
Inventories held for sale or supplies to be consumed
in the production process in the ordinary course
Receivables include accounts and notes receivable
and employee receivables… in ordinary course.
Prepaid expense are assets, they expire and become
expense with the passage of time…
Trading investment are for purpose of generating a
profit from short – term fluctuations
Cash and cash equivalents must be available for a
demand withdrawal, current use
3.2 Structure and content
Classification of assets

Noncurrent assets include tangible, intangible,

operating, and financial assets of a long term.
3.2 Structure and content
Classification of liabilities

Expected to be settled Held primarily for

in the normal course trading purposes

Current
liabilities
Due to be settled within Does not have an
twelve months of the unconditional right to
date of statement of defer settlement beyond
financial position twelve months
3.2 Structure and content
Classification of liabilities
Accounts payable, notes payable, wage payable,
taxes payable… in normal operating cycle

Rent received in advance and unearned revenues…

Other obligation maturing within the current

operating cycle…
3.2 Structure and content
Classification of liabilities

Noncurrent liabilities : Obligations that are not

expected to be settled within the current operating
cycle
3.2 Structure and content
Classification of shareholders’equity
Share capital : the number of shares authorized,
issued and outstanding
Retained earnings: the accumulated earnings since
the inception of entity, less earning distributed to
owners in the form of dividends

Noncontrolling interests shown separately from

owners’ equity in consolidated financial statement

Disclosure of share capital : entity is required to

disclose information for managing capital
3.2 Structure and content
Statements of profit or loss and other
comprehensive income
Other comprehensive income is the total of
income less expenses that are not recognized in
profit or loss…

Comprehensive income comprises all

components of “profit and loss” and “other
comprehensive income “
3.2 Structure and content
Statements of profit or loss and other
comprehensive income
A single statement of profit or
loss and other comprehensive
income

Presentation
* A statement displaying
components of profit or loss.
* A second statement beginning
with profit or loss and
displaying components of
other comprehensive income
3.2 Structure and content
Statements of profit or loss and other
comprehensive income

Reporting
period

Normally presented annually

3.2 Structure and content
Statements of profit or loss and other
comprehensive income

Presenting
expense

Function of expense Nature of expense

3.2 Structure and content
Statements of profit or loss and other
comprehensive income

Cost of
goods sold

Example of schedules of
Example of schedule
cost of goods
of cost of goods sod
manufactured and sold
3.2 Structure and content
Example of schedule of cost of goods sod

Beginning inventory
Add : Purchase…
Less : Purchase discount
Net purchase
=> Cost of goods availabe for sale
Less : Ending inventory
=> Cost of goods sold
3.2 Structure and content
Example of schedule of cost of goods
manufactured and sod
Direct material used
Direct labor
Factory overhead
Indirect material
Other overhead items
=> Manufacturing cost incurred
Add : Work in process, Jan 1
Less : Work in process, Dec 31
=> Cost of goods manufactured
3.2 Structure and content
Example of schedule of cost of goods
manufactured and sod

Finished goods inventory, Jan 1

Add : Cost of goods manufactured
=> Cost of goods available for sale
Less : Finished goods inventory, Dec 31
=> Cost of goods sold
3.2 Structure and content
Presentation in other comprehensive
income section

* Change in revaluation surplus

* Actuarial gains and losses on defined
employee benefit plans
* Gain and losses from translating the
financial statement
* Gain or loss on remeasuring available for
sale financial asset
* Gain or loss on hedging instrument in
cash flow hedge
3.2 Structure and content
Statement of changes in equity

• Total comprehensive income for the

period
• The effects of retrospective application
• Contributions from and distributions to
owners
• The carrying amount at beginning and the
end of period.
3.2 Structure and content
Notes

• Present information about the basis of

preparation of financial statements and
accounting policies
• Disclose the information required by
IFRS that not presented elsewwhere
• Povide information that not presented
elsewwhere
 FINISH
CHAPTER 3

THANK YOU !
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