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IAS 1
PRESENTATION OF FINANCIAL STATEMENTS

OBJECTIVE
Prescribe the basis for preparation & presentation of general purpose financial statements To achieve comparability with:

1. Own financial statements of previous periods

2. Financial statements of other entities

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SCOPE
Applicable to all types of entities.

Consolidated or separate financial statements.

Not Applicable to Condensed interim financial statements (IAS 34). However Para 15 to 35 apply. Terminologies used can be changed for -entities with Not forprofit activities.

GENERAL PURPOSE FINANCIAL STATEMENTS

General Purpose Financial Statements are those intended to meet the needs of users who are not in a position to ho require an entity to prepare reports tailored to their particular information needs.

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COMPLETE SET OF FINANCIAL STATEMENTS

A statement of financial position. p A statement of comprehensive income. A separate statement of changes in equity. A statement of cash flows. Notes.

A statement of financial position at the beginning of the earliest comparative period

Retrospective Application As Per IAS 8

Retrospective Restatement As per IAS 8

When an entity Reclassifies Items in its financial statements

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OTHER IMPORTANT POINTS :

Different Titles may be used

All components should be presented with equal prominence Other Reports & Statements are outside the scope of IFRS. Example Environmental Report, Value Added Statements etc.

Structure & Content of Statement of Financial Position No F N Format prescribed ib d

Minimum Line Items prescribed

Additional Line items ,heading & sub totals can be given when relevant.

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MINIMUM LINE ITEM

a) b) c) d) e) f) g) h) i) j)

k) l) m) n) o) p) q) r)

Property, plant and equipment; Investment property; Intangible assets; Financial assets (excluding amounts shown under (e), (h) and (i)); Investments accounted for using the equity method; Biological Bi l i l assets; t Inventories; Trade and other receivables; Cash and cash equivalents; The total of assets classified as held for sale and assets included in disposal groups classified as held for sale in accordance with IFRS 5 Noncurrent Assets Held for Sale and Discontinued Operations; Trade and other payables; Provisions; Financial liabilities (excluding amounts shown under (k) and (l)); Liabilities and assets for current tax, as defined in IAS 12 Income Taxes; Deferred tax liabilities and deferred tax assets, as defined in IAS 12; Liabilities included in disposal groups classified as held for sale in accordance with IFRS 5; Non-controlling interests, presented within equity; and Issued capital and reserves attributable to owners of the parent.

Presentation of line Items

Line items can be presented on the basis of following classifications :
Current/Non Current Order of Liquidity Mixed Basis

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CURRENT ASSETS :
An entity shall classify an asset as current when
It expects to realize the asset , or intends to sell or consume it, in its normal operation cycle. , p y It holds the assets primarily for the purpose of trading. It expects to realize the asset within 12 months after the reporting period. The asset is Cash or Cash Equivalent which is not restricted in use.

All other assets are non-current assets, alternative description can be used as fixed or long term

CURRENT LIABILITIES : AN ENTITY SHALL

CLASSIFY A LIABILITY AS CURRENT WHEN

It expects to settle the liability in its Normal p g y Operating Cycle. It holds the liability primarily for the purpose of trading. The liability is due to be settled within 12 months after the reporting period The entity does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting period. ALL OTHERS LIABILITIES ARE NONCURRENT

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IMPORTANT POINTS
Deferred Tax/Liabilities to be classified as Non Current. Amount expected to be recovered/settled after more than 12 months to be disclosed separately. Long Term Financial Liabilities due to be settled in 12 months current Refinancing/Roll Over at discretion of an entity NON Current entityCurrent, otherwise Current Rectification of Breach after the reporting period Current

STATEMENT OF COMPREHENSIVE INCOME.

All items of income and expense recognized in a p period must be p presented either: In a single statement of comprehensive income; or In two statements: A statement displaying components of profit or loss and A seco d statement beginning with profit or loss second state e t beg g w t p o t o oss and displaying components of other comprehensive income.

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Minimum Line Items

a) b) c) d) e) Revenue Finance costs Share of the profit or loss of associates and joint ventures accounted for using the equity method Tax T expense A single amount comprising the total of a) the post-tax profit or loss of discontinued operations and b) the post-tax gain or loss recognized on the disposal of the assets or disposal group(s) constituting the discontinued operation Profit or loss Each component of other comprehensive income classified by nature Share of the other comprehensive income of associates and joint ventures accounted for using the equity method Total comprehensive income

f) g) h) i)

STATEMENT OF COMPREHENSIVE INCOME

Either on the basis of Nature of Expense or Function of Expense Expense If Function of Expense followed, disclosure required in Notes on the Nature of Expense Additional Line items ,heading & sub totals can be given when relevant. No it N item of Income/Expense shall be presented as Extraordinary fI /E h ll b t d E t di Items Disclosure Attributable to owners & Attributable to Non Controlling Interest

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COMPONENTS OF OTHER COMPREHENSIVE INCOME

Changes in revaluation surplus (IAS 16 and IAS 38) Actuarial gains and losses on defined benefit plans recognized in accordance with IAS 19 Gains and losses arising from translating the financial statements of a foreign operation (IAS 21) Gains and losses on re-measuring available-for-sale financial assets (IAS 39) The effective portion of gains and losses on hedging instruments in a cash flow hedge (IAS 39).

IMPORTANT POINTS REGARDING OCI

Reclassification Adjustment : Are amounts reclassified to profit or loss in the Current period that were recognized in OCI in the Current or previous periods.

Components can be shown Net or Gross. Reclassification Adjustments can be presented in the SOCI or in the Notes.

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RECLASSIFICATION ADJUSTMENTS
On disposal of foreign operation (IAS 21) On de recognition of available for sale financial assets (IAS 39) When a hedged forecast transaction affects profit or loss (IAS 39) On changes in revaluation surplus (IAS 16 & 38) On actuarial gains & losses on defined benefit plans (IAS 19)

ARISES

DO NOT ARISE

STATEMENT OF CHANGES IN EQUITY

IAS 1 requires an entity to present a statement of changes in equity as a separate component of the financial statements. The statement must show:
Total comprehensive income attributable: 1. Owners 2. Non-controlling interest

Transaction with owners: 1. Contributions 2. Distributions

For each component of Equity the effects of Retrospective Application & Restatements.

Reconciliation between carrying amounts : At the beginning At the end

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Statement of changes in equity.

Share Capital Balance at 1 january,2009 Change in accounting policy Restated balance R t t db l Changes in equity for 2009 Issue of share capital Dividends Total comprehensive Income for the year. Transfer to retained earnings. Balance at 31december 2009 X X (X) X X X X X X X X X X (X) X (X) X X X X Share Revaluation Retained Non Premium Surplus Earnings Controlling X X X (X) X X (X) X Total

X (X) X

NOTES TO THE FINANCIAL STATEMENTS

Information
Basis of presentation and accou t g a d accounting policies used. Disclosures required by IFRS not p presented in financial statements. Additional information e eva t relevant to users.

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NOTES SHOULD NORMALLY BE PRESENTED

IN THE FOLLOWING MANNER
A statement of compliance with IFRSs A summary of significant accounting policies applied, including:
The measurement basis (or bases) used in preparing the financial statements The other accounting policies used that are relevant to an understanding of the financial statements

Supporting information for items presented on the face of the statement of financial position (balance sheet), statement of comprehensive income (and income statement, if presented), statement of changes in equity and statement of cash flows, in the order i which each statement and each line item is presented d in hi h h d h li i i d Other disclosures, including:
Contingent liabilities (see IAS 37) and unrecognized contractual commitments Non-financial disclosures, such as the entity's financial risk management objectives and policies (see IFRS 7)

GENERAL FEATURES
Fair presentation and d compliance with IFRS

Going G i concern Materiality and aggregation

Accrual basis of accounting General features Offsetting Consistency of presentation Comparative information Frequency of reporting

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FAIR PRESENTATION & COMPLIANCE WITH IFRS

The financial statements must "present fairly" the financial position, position financial performance and cash flows of an entity. entity Fair presentation requires faithful representation of the effects of transactions/events/conditions in accordance with definition & recognition criteria for assets , liabilities , income Application of IFRSs, with additional disclosures , is presumed to result in fair presentation presentation. Entity shall make an Explicit & Unreserved statement of compliance with IFRS in Notes.

Fair Presentation overrides

In extremely rare circumstances ,if compliance would be misleading, and therefore departure from a standard is necessary to achieve a fair p y presentation, the entity , y discloses: Management has concluded that the F/S fairly present the entitys financial position, performance and cash flows That it has complied in all material respects with applicable IFRS except that it has departed to achieve fair presentation The standard from which entity has departed The nature of departure The financial Impact of the departure.

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Going concern
Ability to continue operations for the foreseeable future. Management is required to assess, at the time of preparing F/S, the entitys ability to continue as a going concern and this assessment should cover a period of 12 months from the end of the reporting period. Where there are significant doubts about the entitys ability t continue as going concern, d t il of th bilit to ti i details f those uncertainties should be disclosed even if F/S continue to be prepared on going concern basis.

Offsetting
Offsetting of assets and liabilities and of income and expenses is not allowed unless permitted by IFRS. IAS 20 permits offsetting of capital grant against an asset. Offsetting ,except when it reflects the substance of transaction, detracts the ability of the user to understand the transactions undertaken. Items that would not be considered to be offsetting of assets and liabilities include : Gains/losses on the disposal of non current assets are reported after deducting the carrying value and selling expenses from the proceeds. Releases of provisions against the expenses incurred incurred.
Accumulated depreciation of property, plant & equipment. Impairment provisions. Accumulated amortization of intangible assets. Provision for inventory obsolescence. Provision for bad debts.

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Frequency of reporting
A complete set of financial statements should be presented at least annually. In I exceptional circumstances where there is a change in i l i h h i h i the end of the reporting period ( so the statements are presented for a period other than a year) the entity should disclose:
Reason for a period other than one year being used; The fact that comparable amounts presented are not entirely comparable.

Accrual basis of accounting Assets , liabilities, equity , income and expenses are:
Recognized when they occur not as cash received or paid. Recorded in accounting records and reported in the financial statements of the periods to which they relate.

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Materiality and aggregation

An item is material if its omission or misstatement can influence the economic decisions of users taken on basis of financial statements. Items are classified based on materiality. Items of same nature are aggregated if they are not material. t t i l

Consistency of presentation
Presentation and classification of items in the financial statements should be retained from one period to the next. A change is only allowed if it:
Will result in a more appropriate presentation(e.g. if there is a significant change in the nature of the entitys operation); or Is required by an IFRS.

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Comparative information
A entity shall disclose comparative information in respect of the previous period for all amounts reported in the current period F/S.
( Entity shall present at least two of each of financial statements) )

Where there is restatement of prior period information statement of financial position is also required for the beginning of earliest comparative period.
i.e. a minimum of three statements of financial position (and two each of the other statements). Restatement arises when ,for example, an accounting policy is applied retrospectively in l i li i li d i l i accordance with IAS 8.

Copyright & Acknowledgement

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THANK YOU

Example
Question : A company produces airplanes. The length of time between first purchasing raw materials to make the planes and the date company completes the production and delivery is 10 months. The company receives payments for the planes 6 months after delivery. a)How should the company show its inventory and trade receivables in its classified statement of financial position? The time between the first purchase of goods and the realisation of those goods in cash is 16 months (10 months + 6 months). The age of inventory held by the company at the year end will range between zero months to 10 months, and once the goods are delivered, it will take a further 6 months to receive payment. All of the inventory should be classified as a current asset, even though some of the inventory will not be realised in cash within 12 months of the reporting period: Thi i b ti i d This is because th i the inventory i realised i th t is li d in the entity's normal operating cycle. However, the expected date of recovery of the inventory should be disclosed by the company. The trade receivables will be realised in cash within 12 months of the reporting period and are, therefore, included as a current asset as we would expect.

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b)Would the answer be different if the production time was 14 months and the time between delivery and payment was a further 15 months? No. No The inventory and trade receivables should still be classified as a current asset. In this case, the inventory is, on average, older but nevertheless it is realised in cash in the entity's normal operating cycle. Similarly, the trade receivables are realised in cash as part of the operating cycle and should be classified as a current asset, even though they will not be realised in cash within 12 months of the reporting period. BACK

Classification of expenses -nature

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Classification of expenses-function

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