Saturday, January 26, 2013

IAS 1 (2007) Presentation of Financial Statements


Objective
To set out the overall framework for presenting general purpose financial statements, including guidelines for their structure and the minimum content.

Summery
• Fundamental principles established for the preparation of financial statements, including going concern assumption, consistency in presentation and classification, accrual basis of accounting, and materiality.
• Assets and liabilities, and income and expenses, are not offset unless offsetting is permitted or required by another IFRS.
• Comparative prior-period information is presented for amounts shown in the financial statements and notes.
• Financial statements are generally prepared annually. If the end of the reporting period changes, and financial statements are presented for a period other than one year, additional disclosures are required.
• A complete set of financial statements comprises:
– a statement of financial position;
– a statement of profit or loss and other comprehensive income;
– a statement of changes in equity;
– a statement of cash flows;
– notes; and
– a statement of financial position as at the beginning of the earliest comparative period.
• Entities may use titles for the individual financial statements other than those used above.
• Specifies minimum line items to be presented in the statement of financial position, statement of profit or loss and other comprehensive income and statement of changes in equity, and includes guidance for identifying additional line items. IAS 7 provides guidance on line items to be presented in the statement of cash flows.
• In the statement of financial position, current/non-current distinction is used for assets and liabilities unless presentation in order of liquidity provides reliable and more relevant information.
• The statement of profit or loss and other comprehensive income includes all items of income and expense – (i.e. all ‘non-owner’ changes in equity) including (a) components of profit or loss and (b) other comprehensive income (i.e. items of income and expense that are not recognised in profit or loss as required or permitted by other IFRSs). These items may be presented either:
– in a single statement of profit or loss and other comprehensive income (in which there is a sub-total for profit or loss); or
– in a separate statement of profit or loss (displaying components of profit or loss) and a statement of profit or loss and other comprehensive income (beginning with profit or loss and displaying components of other comprehensive income).
• Items of other comprehensive income should be grouped based on whether or not they are potentially reclassifiable to profit or loss at a later date.
• Analysis of expenses recognised in profit or loss may be provided by nature or by function. If presented by function, specific disclosures by nature are required in the notes.
• The statement of changes in equity includes the following information:
– total comprehensive income for the period;
– the effects on each component of equity of retrospective application or retrospective restatement in accordance with IAS 8; and
– for each component of equity, a reconciliation between the opening and closing balances, separately disclosing each change.
• Specifies minimum note disclosures which include information about
– accounting policies followed;
– the judgements that management has made in the process of applying the entity’s accounting policies that have the most significant effect on the amounts recognized in the financial statements;
–sources of estimation uncertainty; and
–information about management of capital and compliance with capital requirements.
• Implementation guidance for IAS 1 includes illustrative financial statements other than the statement of cash flows (see IAS 7).

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