Important Features of IAS 1.pdf

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I I MMP P O O R R T T A A N N T T F F E E A A T T UUR R E E S S O O F F

IAS 01

Presentation

of

Financial Statements

Final Issue date: September, 2007

Effective date: 01 January, 2009



Ma d e By: Jayed Ha s n at

When an entity applies an accounting policy retrospectively or makes a

retrospective re-statement of items in its financial statements, or when

it reclassifies items in its financial statements, it must also present a

statement of financial position (balance sheet) as at the beginning of theearliest comparative period.

Reports that are presented outside of the financial statements –

including financial reviews by management, environmental reports,

and value added statements – are outside the scope of IFRSs. [IAS 1.14]

Financial statements cannot be described as complying with IFRSs

unless they comply with all the requirements of IFRSs (which includesIAS, IFRIC Interpretations and SIC Interpretations). [IAS 1.16]

IAS 1 acknowledges that, in extremely rare circumstances, management

may conclude that compliance with an IFRS requirement would be so

misleading that it would conflict with the objective of financial

statements set out in the Framework. In such a case, the entity is

required to depart from the IFRS requirement, with detailed disclosure

of the nature, reasons, and impact of the departure. [IAS 1.19-21]

IAS 1 requires management to make an assessment of an entity's ability

to continue as a going concern. If management has significant

concerns about the entity's ability to continue as a going concern, the

uncertainties must be disclosed. If management concludes that the

entity is not a going concern, the financial statements should not be

prepared on a going concern basis, in which case IAS 1 requires a series

of disclosures. [IAS 1.25]

IAS 1 requires that an entity prepare its financial statements, except for

cash flow information, using the accrual basis of accounting. [IAS 1.27]




Each material class of similar items must be presented separately in the

financial statements. Dissimilar items may be aggregated only if they

are individually immaterial. [IAS 1.29]

If the annual reporting period changes and financial statementsare prepared for a different period, the entity must disclose the

reason for the change and state that amounts are not entirely

comparable. [IAS 1.36]

Current assets are: [IAS 1.66]

expected to be realised in the entity's normal operating cycle held primarily for the purpose of trading expected to be realised within 12 months after the reporting period cash and cash equivalents (unless restricted).

Apart from above, all other assets are non-current.

Current liabilities are those: [IAS 1.69]

expected to be settled within the entity's normal operating cycle held for purpose of trading due to be settled within 12 months for which the entity does not have an unconditional right to defer

settlement beyond 12 months (settlement by the issue of equity

instruments does not impact classification).Other liabilities are non-current.

When a long-term debt is expected to be refinanced under an existing

loan facility, and the entity has the discretion to do so, the debt is

classified as non-current, even if the liability would otherwise be due

within 12 months. [IAS 1.73]

General Features of Financial Statements

Fair presentation and Compliance Accrual Basis Materiality

&

AggregationFrequency ofReporting

Comparatives Consistency

Going Concern Offsetting




If a liability has become payable on demand because an entity has

breached an undertaking under a long-term loan agreement on or

before the reporting date, the liability is current, even if the lender has

agreed, after the reporting date and before the authorisation of the financial statements for issue, not to demand payment as a consequence

of the breach. [IAS 1.74]

However, the liability is classified as non-current if the lender agreed by

the reporting date to provide a period of grace ending at least 12 months

after the end of the reporting period, within which the entity can

rectify the breach and during which the lender cannot demand

immediate repayment. [IAS 1.75]

Minimum items of statement of financial position [IAS 1.54]

(a) roperty, plant and equipment

b) investment property

c) intangible assets

d) inancial assets (excluding amounts shown under (e), (h), and (i))

e) investments accounted for using the equity method

f) biological assets [IAS - 41]

(g) Inventories

(h) trade and other receivables

(i) cash and cash equivalents

j) assets held for sale

(k) trade and other payables

(l) Provisions

m) inancial liabilities (excluding amounts shown under (k) and (l))

(n) current tax liabilities and current tax assets, as defined in IAS 12

(o) deferred tax liabilities and deferred tax assets, as defined in IAS 12

p) liabilities included in disposal groups

q) non-controlling interests, presented within equity

r) Issued capital and reserves attributable to owners of the parent.

Further sub-classifications of line items presented are made in thestatement or in the notes, for example: [IAS 1.77-78]:

http://www.iasplus.com/en/standards/ias/ias12







classes of property, plant and equipment disaggregation of receivables disaggregation of inventories in accordance with IAS 2 disaggregation of provisions into employee benefits and other items

Classes of equity and reserves.

Share capital and reserves

The following disclosures are required: [IAS 1.79] numbers of shares authorised, issued and fully paid, and issued but

not fully paid par value (or that shares do not have a par value) a reconciliation of the number of shares outstanding at the beginning

and the end of the period description of rights, preferences, and restrictions

treasury shares, including shares held by subsidiaries and associates shares reserved for issuance under options and contracts

a description of the nature and purpose of each reserve within

equity.

Concepts of profit or loss and comprehensive income

Profit or loss is defined as "the total of income less expenses, excluding thecomponents of other comprehensive income".

Other comprehensive income is defined as comprising "items of income andexpense (including reclassification adjustments) that are not recognised in profit or loss as required or permitted by other IFRSs".Total comprehensive income is defined as "the change in equity during a period resulting from transactions and other events, other than thosechanges resulting from transactions with owners in their capacity asowners". [IAS 1.7]

***Some IFRSs require or permit that some components to be excluded from profit or loss and instead to be included in other comprehensive

income. Examples of items recognised outside of profit or loss:

Changes in revaluation surplus where the revaluation method is useunder IAS 16 Property, Plant and Equipment and IAS 38 IntangiblAssets

Remeasurements of a net defined benefit liability or asset recognisein accordance with IAS 19 Employee Benefits (2011)












Exchange differences from translating functional currencies into presentation currency in accordance with IAS 21 The Effects oChanges in Foreign Exchange Rates

Gains and losses on remeasuring available-for-sale financial assets in

accordance with IAS 39 Financial Instruments: Recognition anMeasurement

The effective portion of gains and losses on hedging instruments in acash flow hedge under IAS 39 or IFRS 9 Financial Instruments

Gains and losses on remeasuring an investment in equity instrumentswhere the entity has elected to present them in other comprehensiveincome in accordance with IFRS 9

The effects of changes in the credit risk of a financial liabilitydesignated as at fair value through profit and loss under IFRS 9.

Format of statement

IAS 1 does not prescribe the format of the statement of financial position.Assets can be presented current then non-current, or vice versa, andliabilities and equity can be presented current then non-current thenequity, or vice versa. A net asset presentation (assets minus liabilities) isallowed. The long-term financing approach used in UK and elsewhere – fixed assets + current assets - short term payables = long-term debt plus

equity is also acceptable.

The Financial Performance statement(s) must present: [IAS 1.81A]

profit or loss total other comprehensive income comprehensive income for the period an allocation of profit or loss and comprehensive income for the

period between non-controlling interests and owners of the parent

In P/L Statement among other items there should be –

share of the profit or loss of associates and joint ventures accounted for using the equity method

certain gains or losses associated with the reclassification of financialassets

a single amount for the total of discontinued items



http://www.iasplus.com/en/standards/ifrs/ifrs9

http://www.iasplus.com/en/standards/ifrs/ifrs9



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Important Features of IAS 1.pdf