presentation of financial statements.ppt

IAS1 Presentation of Financial Statements Syllabus B3C1011ef Purpose• To prescribe the basis for presentation of general-purpose financial statements, in order to ensure comparability. – General-purpose financial statements are those which are not tailored to meet specific information needs of users.2Concepts applied• Accruals – effects of transactions and events are recognised when they occur, not when cash is received or paid for them. • Going concern • Consistency of presentation • Materiality and aggregation • Offsetting • Comparative information3A complete set of financial statements• A statement of financial position • Either – A statement of comprehensive income, or – An income statement plus a statement showing other comprehensive income • A statement of changes in equity • A statement of cash flows • Accounting policy and explanatory notes4• Relationship SCI (IS + a statement) : Profit or loss, OCI -> SOCIE: Components of equity -> SFP • Content and Form5Identification of financial statements • 表头 – Name of the reporting enterprise – Whether an individual enterprise or a group of enterprises is covered – Reporting date or period – Reporting currency – Level of precision used in the presentation of figures6SFP-Assets• Current assets – is expected to be realised in, or is held for sale or consumption in, the normal course of the enterprise’s operating cycle; or – is held primarily for trading purposes or for the short-term and expected to be realised within 12 months of the reporting date; or – is cash or cash equivalent asset which is not restricted in its use.7• Non-current assets – Tangible assets come before intangible • Current assets – Generally listed in their order of increasing liquidity • Disclosure in the notes – Detail of movements during the year on tangible asset (IAS 16) and intangible assets (IAS 38)8Liabilities• Current liabilities – is expected to be settled in the normal course of the enterprise’s operating cycle; or – is held primarily for trading purposes; or – is due to be settled within 12 months of the balance sheet date. • Non-current liabilities should be showed separately from current liabilities in order to analyse the liquidity of the enterprise.9• Financial liabilities due to be settled within 12 months of the reporting date (current portion of long-term borrowings) should be classified as non-current liabilities if: – the original term was for a period of more than 12 months; – the enterprise intends to refinance the obligation on a long-term basis; 10– that intention is supported by an agreement to refinance, or to reschedule payments, which is completed before the financial statements are approved. • Disclosure of the above liabilities in notes – the amount – information in support of this presentation11IS- Format and Classification• The nature of expense method – Applied in many small companies • The function of expense or cost of sales method – More commonly used in practice and for examination purposes – Be arbitrary and involve considerable judgment • Both are identical from profit from operations onwards.12Comprehensive income• Comprehensive income for a period includes profit or loss for that period plus other comprehensive income recognised in that period. There are two ways to present OCI. • The components of other comprehensive income include: – changes in revaluation surplus (IAS 16 and IAS 38). – actuarial gains and losses on defined benefit plans recognised in accordance with paragraph 93A of IAS 19. 13– gains and losses arising from translating the financial statements of a foreign operation (IAS 21). – gains and losses on FV through OCI financial assets (IAS 39). – the effective portion of gains and losses on hedging instruments in a cash flow hedge (IAS 39). • Disclosure about other comprehensive income – income tax relating to each component – reclassification adjustments relating to components14Explanatory Notes • The notes should provide any additional information necessary for a fair presentation. • The notes should be presented systematically. – cross-references between the notes and the statements • Required note of accounting policies – the measurement basis used in preparing the financial statements – each specific accounting policy that is necessary for a proper understanding of the financial statements15Two types of organization• Specialised, not-for- profit and public sector entities – to achieve value for money, i.e. 3E p470 – to trustees, government or public – limited to donations, government subsidies.• Profit oriented entities– The primary aims is to make profit and increase shareholder wealth. – Managers are accountable to shareholders. – The sources of financing are loans and share capital.16• How are IFRSs related to specialised, not-for-profit and public sector entities? – Though they do not aim to achieve profits, some measurement accounting standards will be。