International Accounting
Standard 1
Presentation of Financial
Statements
Bhupendra Mantri, FCA,
Kalani & Co., Chartered Accountants,
Jaipur (India)
Mobile: 91 98298 88810
Email: bmantri@kalanico.com
Website: www.kalanica.com
Objective
Basis for presentation
of general purpose
financial statements
to ensure
comparability with the
entity’s financial
statements of
previous periods and
with the financial
statements of other
entities
Overall requirements
for presentation of
financial statements,
guidelines for their
structure and
minimum
requirements for their
content
Scope
Financial Statements in accordance with
IFRS
Interim Financial Reporting (IAS 34) – Only
Para 15-35 applies
All entities – CSF / SFS (IAS 27)
Terminology used suitable for profit oriented
entities
Entities not having equity – FS presentation
of members’ or unitholders’ interests
List of IFRS
IFRS 1
IFRS 2
First Time Adoption of International
Financial Reporting Standards
Share based Payment
IFRS 3
Business Combination
IFRS 4
Insurance Contracts
IFRS 5
Non current assets held for sale and
discontinued operations
IFRS 6
Exploration for and Evaluation of Mineral
Resources
IFRS 7
Financial Instruments: Disclosure
IFRS 8
Operating Segments
IAS 1
IAS 2
IAS 7
IAS 8
List of IFRS (IAS)
IAS 10
Presentation of Financial Statements
Inventories
Statement of Cash Flows
Accounting Policies, Changes in Accounting
Estimates and Errors
Events after Reporting Periods
IAS 11
IAS 12
Construction Contracts
Income Taxes
IAS 16
IAS 17
IAS 18
Property, Plant and Equipment
Leases
Revenue
IAS 19
Employee Benefits
IAS 20
Accounting for Governemnt Grants and
Disclosure of Government Assistance
List of IFRS (IAS)
IAS 21
IAS 23
The Effect of Changes in Foreign Exchange Rates
Borrowing Costs
IAS 24
IAS 26
Related Party Disclosure
Accounting and Reporting by Retire Benefit Plans
IAS 27
Consolidated and Separate Financial Statements
IAS 28
IAS 29
Investment in Associates
Financial Reporting in Hyperinflationary Economies
IAS 31
IAS 32
Interests in Joint Ventures
Financial Instruments: Presentation
IAS 33
IAS 34
Earnings Per Share
Interim Financial Reporting
IAS 36
IAS 37
Impairment of Assets
Provisions, Contingent Liabilities and Contingent Assets
List of IFRS (IAS)
IAS 38
Intangible Assets
IAS 39
Financial Instruments: Recognition and Measurement
IAS 40
Investment Property
IAS 41
Agriculture
Definitions
General Purpose Those intended to meet the needs of users who are
Financial
not in a position to require an entity to prepare
Statements
reports tailored to their particular information needs
Impracticable
Applying a requirement is impracticable when the entity
cannot apply it after making every reasonable effort do
so.
IFRSs
Standards and Interpretations adopted by the IASB. They
comprises: IFRS, IAS, Interpretation by IFRIC, SIC.
Material Omissions Are materail if they could, individually or collectively,
or misstatements influence the economic decisions that users make on the
of items
basis of financial statements.
Notes
Contain information in addition to that presented in the
statement
of
financial
position,
statement
of
comprehensive income, separate income statement(if
presented), statement of changes in equity and statement
of cash flows.
Other
comprehensive
income
Comprises items of income and expense (including
reclassification adjustments) that are not recognized in
profit or loss as required or permitted by other IFRSs.
Components of other
comprehensive income
Changes in revaluation surplus (IAS 16 Property, Plant
and Equipment and IAS 38 Intangible Asset)
Actuarial gains and losses on defined benefit plans
recognized in accordance with para 93A of IAS 19
Employee Benefits
Gains and losses arising from translating the financial
statements of foreign operations (IAS 21 The Effects of
Changes in Foreign Exchange Rates
Gain and losses on remeasuring available for sale
financial assets (IAS 39 Financial Instruments:
Recognition and Measurement)
The effective portion of gains and losses on hedging
instruments in cash flow hedge (IAS 39)
Definitions
Owners
Are holders of instruments classified as equity.
Profit or Loss
Is the total of income less expenses, excluding the
components of other comprehensive income.
Reclassification
adjustments
are amounts reclassified to profit or loss in the current
period that were recognized in the current or previous
periods.
Total Comprehensive Is the change in equity during a period resulting from
Income
transactions and other events, other than those
changes resulting from transactions with owners in their
capacity as owners.
Total comprehensive income comprises all components
of ‘profit or loss’ and of ‘other comprehensive income’.
Complete set of financial statements
A statement of financial position as at the end of the period
A statement of comprehensive income for the period
A statement of changes in equity for the period
A statement of cash flow for the period
Notes, comprising a summary of significant accounting policies
and other explanatory information
A statement of financial position as at the beginning of the
earliest comparative period
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 IFRS
Financial position, financial performance and cash flow
Explicit and unreserved statement of compliance
Selection and application of Accounting policies (IAS 8),
presenting information to provide relevant, reliable, comparable
and understandable information and Additional Information
Inappropriate Accounting Policies
Fair presentation and compliance with IFRS
Departure from
IFRS – Extreme
Circumstances'
(Disclosure)
• Management conclusion about fair presentation
• Compliance with IFRS, except departure from particular
requirement to achieve fair presentation
• Title of departed IFRS, nature of departure, treatment IFRS
requires, reason why treatment would mislead
• Financial effect of the departure on each item
Departure from requirement of IFRS in prior period
Departure from
IFRS but regulatory
framework prohibits
departure
• Title of IFRS, nature of the requirement, reason
• The adjustments to each item in the financial statements that
management has concluded would be necessary to achieve
fair presentation
Going Concern
Assessment of entity’s
ability by management
Disclosure
when
financial
statements
are not on
going
concern
basis
GCB
unless
contrary
intention or
no realistic
alternative
to
liquidation
Disclosure of
Uncertainties
Accrual Basis of Accounting
An entity shall
prepare its
financial
statements, except
for cash flow
information using
the accrual basis
of accounting.
Materiality and aggregation
An entity shall
present separately
each material class
of similar items. It
shall present
separately items of a
dissimilar nature or
function unless they
are immaterial.
Offsetting
An entity shall not offset assets and
liabilities or income and expense, unless
required or permitted by an IFRS except:
When offsetting reflects
substance of the transaction
or other event
Detracts from ability of users
both to understand the
transaction, other events and
conditions that have occurred
and to assess the entity’s
future cash flows.
Frequency of reporting
At least annually
In case change
in end of
reporting period
and presents
financial
statement for
period longer or
shorter than one
year – disclosure
• The reason for using a
longer or shorter period
• The fact that amounts
presented in the financial
statements are not
entirely comparable
Comparative Information
For all amounts reported in current period’s financial statements
except when IFRSs permit or require otherwise
When the entity
changes the
presentation or
classification of items
– Reclassification of
comparative amounts
– Disclosure:
When impracticable
to reclassify
comparative
amounts, an entity
shall disclose:
• The nature of transaction
• The amount of each item or class
of items that is reclassified; and
• The reason for reclassification
• The reason for not reclassifying the
amounts;
• The nature of adjustments that
would have been made if the
amounts had been reclassified
Consistency of presentation
An entity shall
retain the
• It is apparent, following a significant
presentation
change in the nature of the entity’s
operations or a review of its financial
and
statements, that another presentation
classification
or classification would be more
of items in
appropriate having regard to the criteria
financial
for the selection and appropriation of
accounting policies in IAS 8 or
statements
• An IFRS requires a change in
from on
presentation
period to the
next unless:
Structure and content
Introduction
Identification of
the financial
statements
Statement of
financial
position
Statement of
comprehensive
income
Statement of
changes in
equity
Statement of
cash flows
Notes
Other
disclosures
Identification of the financial statements
An entity shall
clearly identify
• the financial statements and distinguish them from
other information in the same published document
• each financial statement and the notes.
Display of
information
prominently,
and repeat it
when
necessary for
the information
presented to be
understandable:
• The name of reporting entity or other means of
identification, and changes in that information
from the end of the preceding reporting period
• Whether the financial statements are of an
individual entity or a group of entities
• The date of the end of the reporting period or the
period covered by the set of financial statements
or notes
• The presentation currency, as defined in IAS 21;
and
• The level of rounding used in presenting amounts
in the financial statements.
Statement of financial position
Information to be
presented in the
statement of
financial position
Current / non
current distinction
Current liabilities
Current assets
Information to be
presented either in
the statement of
financial position or
in the notes
Information to be presented in the statement of
financial position
Property, plant and
equipment
Investment property
Intangible assets
Financial asses
Investments
accounted for using
the equity method
Biological assets
Trade and other
receivables
Cash and cash
equivalents
Non current assets
held for sale and
discontinued
operations
Trade and other
payables
Provisions
Financial liabilities
Liabilities and assets
for current tax as
defined in IAS 12
Deferred tax
liabilities and
deferred tax assets
as defined in IAS 12
Liabilities included
in disposal group
classified as held for
sale
Non controlling
interests, presented
within equity; and
Issued capital and
reserves attributable
to owners of the
parent
Information to be presented in the
statement of financial position
Additional Line items,
heading and subtotals in the
statement of financial
position when such
presentation is relevant to
an understanding of the
entity
Deferred tax assets
(liabilities) not to be
classified as current assets
(liabilities)
Current / non current distinction
Presentation of financial
position by classification
in current and non current
assets, and current and
non-current liabilities
except:
• when a presentation based on liquidity
provides information that is reliable
and more relevant.
• When exception applies, in order of
liquidity.
Disclose amount
expected to be recovered
or settled after more than
twelve months for each
asset and liability line item
that combines amounts
expected to be recovered
or settled:
• No more than twelve months after the
reporting period, and
• More than twelve months after the
reporting period
Current assets
Entity expects to realize the asset, or intends to sell or consume, in its
normal operating cycle;
It holds the asset primarily for the purpose of trading;
It expects to realize the asset within twelve months after reporting period;
or
The asset is cash or cash equivalent (IAS 7) unless the asset is restricted
from being exchanged or used to settle a liability for at least twelve months
after the reporting period
All other assets as non current
Current liabilities
Entity expects to settle the liability in its normal operating cycle;
It holds the liability primarily for the purpose of trading;
The liability is due to be settled within twelve months after reporting period;
or
The entity does not have an unconditional right to defer settlement of
liability for at least twelve months after the reporting period
All other liabilities as non current
Specific Discussion (Para 70-76)
Trade payables, accrual for employees and other operating costs –
Normal operating cycle
Other current liabilities – financial liabilities, bank overdrafts, current
portion of NCL, dividends payable, income taxes and other non trade
payables – Whether due for settlement within twelve months.
Original term of liability, refinance, reschedule agreement after
reporting period
Discretion of entity to refinance / roll over obligation
Breach of provision of long term loan arrangement
Events after the Reporting Period (IAS 1)
Information to be presented either in the
statement of financial position or in the notes
Entity shall disclose, either in the statement of financial position or in the
notes, further sub classification of the line items presented, classified in a
manner appropriate to the entity’s operations.
Sub-classification depends on the requirement of IFRSs, size, nature,
functions of the amounts involved.
Information to be disclosed for each class of share capital
Description of the nature and purpose of each reserve within equity
Statement of comprehensive
income
• Information to be presented in the statement of
comprehensive income
• Profit or loss for the period
• Other comprehensive income for the period
• Information to be presented in the statement of
comprehensive income or in notes
Analysis of Expenses
• ‘Nature of expenses’ method
• ‘Function of expenses’ method
Statement of Changes in equity
• Total comprehensive income for the period
• Effect of retrospective application or
retrospective restatement (IAS 8)
• Reconciliation between the carrying
amount at the beginning and the end of
the period
• Dividend distributed per share
Statement of cash flows – IAS 7
Notes
•
•
•
•
•
Structure
Disclosure of Accounting Policies
Sources of estimation uncertainty
Capital
Other disclosures
Notes - Structure
• Basis of preparation of the financial
statements and the specific accounting
policies
• Information required by IFRSs that is not
presented elsewhere in the financial
statements
• Information relevant to an understanding
of financial statements
• Systemic manner, cross reference
Notes: Disclosure of Accounting Policies
• Measurement basis used in preparing the
financial statements
• Other accounting policies used that are
relevant to an understanding of FS
• Judgments that management has made in
the process of applying the entity’s
accounting policies
Notes: Sources of estimation uncertainty
• Information about the assumption
• Major sources of estimation uncertainty
Capital
An entity shall disclose information that
enables users of its financial statements to
evaluate the entity’s objectives, policies and
processes for managing capital
Notes: Other disclosures
• An entity shall disclose in the notes:
– Dividend proposed or declared
– Amount of any cumulative preference dividends
not recognized
• Domicile and legal form of the entity, its
country of incorporation and the address of
its registered office
• Description of nature of the entity’s
operations and its principal activities
• Name of the parent and the ultimate parent of
the group