PAS 1 PRESENTATION OF FINACIAL STATEMENTS COMPARABILITY • Intra – comparability – period to period • Inter-comparability – between different entities GENERAL PURPOSE FINANCIAL STATEMENTS • those intended to meet the needs of users who are not in a position to require an entity to prepare reports tailored to their particular information needs. • Primary objective: information on financial position, financial performance and cash flows for making economic decisions. • Secondary objective: show results of management’s stewardship over the entity’s resources. COMPLETE SET OF FINANCIAL STATEMENTS • Statement of Financial Position • Statement of Profit or Loss and Other Comprehensive Income • Statement of Changes in Equity • Statement of Cash Flows • Notes to Financial Statements • Additional statement of financial position (as required) GENERAL FEATURES OF FINANCIAL STATEMENTS • Fair Presentation and compliance with PFRS Included in the notes to financial statements “Notes to Financial Statements Statement of Compliance with Philippine Financial Reporting Standards The financial statements of the company have been prepared in accordance with Philippine Financial Reporting Standards (PFRSs), which are adopted by the Philippine Reporting Standards Council (FRSC) from the pronouncements issued by the International Accounting Standards Board (IASB)” • Going Concern entity’s ability to continue as a going concern. assess going concern based on the available information which is at least, but not limited to, 12 months from the reporting date if the entity is profitable, management may conclude that the entity is a going concern if there material uncertainties on the entity’s ability to continue as a going concern, it shall be disclosed. If the entity is not a going concern, the financial statements shall be prepared using another basis. GENERAL FEATURES OF FINANCIAL STATEMENTS • Accrual Basis of Accounting All FS should be on accrual basis except for statement of cash flows • Materiality and Aggregation Each material class of similar items is presented separately A class of similar item is called a “line item”. Dissimilar items are presented separately unless they are immaterial. Individually immaterial items are aggregated with other items. • Offsetting Assets and liabilities, income and expenses are not offset, unless required or permitted by a PRFS GENERAL FEATURES OF FINANCIAL STATEMENTS • Frequency reporting At least annually. Change in reporting period shall disclose the ff: The period covered by the FS The reason for using longer or shorter period, and The fact that amounts presented in the financial statements are not entirely comparable • Comparative information Prior period and Current period • Consistency of presentation Presentation and classification of items in the FS is retained from one period to the next unless a change in presentation is required. MANAGEMENT RESPONSIBILITY OVER FS • • • • • Presentation of FS in accordance with PFRS Internal control over financial reporting Going concern assessment Oversight over financial reporting process and Review and approval of FS PRESENTATION OF STATEMENT OF FINANCIAL POSITION • Classified presentation shows distinction between current and non current assets; current and noncurrent liabilities • Unclassified presentation shows no distinction between current and non current items also based on liquidity • WORKING CAPITAL = Current assets – Current liabilities Current ratio = Current assets / Current liabilities Current ratio = 1.00 CURRENT ASSETS AND CURRENT LIABILITIES CURRENT ASSETS CURRENT LIABILITIES a) Expected to be realized, sold or consumed in the entity’s normal operating cycle a) Expected to be settled in the entity’s normal operating cycle b) Held primarily for trading b) Held primarily for trading c) Expected to be realized within 12 months after the c) Due to be settled within 12 months after the reporting period. reporting period d) Cash or cash equivalent, unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period d) The entity does not have the right at the end of the reporting period to defer settlement of the liability for at least 12 months after the reporting period. Operating cycle – the time between acquisition of assets for processing and their realization in cash or cash equivalents If the normal operating cycle is not clearly identifiable, it is assumed to be 12 months Assets and liabilities that do not form part of the normal operating cycle are presented as current only when they are expected to be settled within 12 months after the reporting period REFINANCING AGREEMENT • a long term obligation that is maturing within 12 months after the reporting period is classified as current, even if a refinancing agreement to reschedule payments on a long term basis is completed after the reporting period and before the FS are authorized for issue. • Obligation is non current if the entity has the right, at the end of the reporting period, to roll over the obligation for at least twelve months after the reporting period under an existing loan facility. LIABILITIES PAYABLE ON DEMAND • generally are classified as current • a long term obligation becomes payable on demand, if breach of a loan provision the liability is still non current if the lender provides the entity by the end of the reporting period a grace period ending at least 12 months after the reporting period within which the entity can rectify the breach. STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME • Single statement – statement of profit or loss and other comprehensive income • Two statements Statement of Profit or loss (income statement) Statement of Other Comprehensive Income PRESENTATION OF EXPENSES • Nature of expense method grouped according to the nature of expenses • Function of expense method classified according to their function (e.g., cost of sales, distribution costs, administrative expenses) OTHER COMPREHENSIVE INCOME • Changes in revaluation surplus • Remeasurement of net defined benefit liability • Gains and losses RECLASSIFICATION ADJUSTMENTS • amounts reclassified to profit or loss in the current period that were recognized in other comprehensive income in the current or previous period PRESENTATION OF OCI • Grouped into Reclassification adjustment is allowed Reclassification adjustments is not allowed:
