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SEMINAR ON IFRS

by
THE INSTITUTE OF COMPANY SECRETARIES
OF INDIA
WITH RELIANCE COMMUNICATIONS &
WIRC ICWAI

22

nd

AUGUST 2009

THRU 50+ CITIES


AND 75+ RELIANCE VIDEO CONF
LOCATIONS
SPEAKER :
Rammohan Bhave, CS, ICWA, CA
mohanbhave@gmail.com
Dr Mrs Anjali Bhave, ICWA, Ph.D.

IAS 1 Presentation of
Financial Statements
Rammohan Bhave & Dr Anjali Bhave
mohanbhave@gmail.com
arbhave@gmail.com
+91 9004043365, +91 9322249029
+91 9322249029

IFRS Based Financial


Statements
IAS -1 Presentation of Financial
Statements is a foundation
standard that explains basic
accounting and financial
reporting principles and style of
presentation.

IFRS Based Financial


Statements
A complete set of Financial Statements comprise
of

A Statement of Financial Position as at the end of the


year;
A Statement of Comprehensive Income for the period;
A Statement of Changes in Equity for the period;
A Statement of Cash Flows for the period;
Notes comprising of a summary of significant
accounting policies and other explanatory information ;
A statement of financial position as at the beginning of
the earliest comparative period when an entity applies
an accounting policy retrospectively or makes a
retrospective restatement of items in its financial
statements, or when it reclassifies items in its financial
statements. [ Para 10, IAS-1]

Structure of Statement of Financial Position


ASSETS
Non-current Assets
Property , Plant & Equipment
Goodwill
Other Intangible Assets
Investments in Associates
Available for Sale Investments
Current Assets
Inventories
Trade Receivables
Other Current Assets
Cash & Cash Equivalents
Total Assets

2009

2008

Structure of Statement of Financial


Position
EQUITY AND LIABILITIES
Equity attributable to the owners of the
parent
Share Capital
Retained Earnings
Other components of Equity
Non-controlling Interest
Total Equity

2009

2008

Non-current Liabilities
Long-term borrowings
Deferred tax
Long term provisions
Total non-current liabilities
Current Liabilities
Trade and other payables
Short-term borrowings
Current portion of long- term borrowings
Current tax payable
Short-term provisions
Total current liabilities
Total liabilities

Minimum Line Items to be Presented in


Statement of Financial Position
( Reference Para 54 of IAS 1
(a)
(b)
(c)

Property, plant and equipment;


Investment property;
Intangible assets;

(d)

Financial assets (excluding amounts shown under (e), (h)


and (i));

(e)
(f)

Investments accounted for using the equity method;


Biological assets;

(g)

Inventories;

Minimum Line Items to be Presented in


Statement of Financial Position
( Reference Para 54 of IAS 1
(h)

Trade and other receivables;

(i)

Cash and cash equivalents;

(j)

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 Non-current
Assets Held for Sale and Discontinued Operations;

(k)

Trade and other payables;

(l)

Provisions;

(m)

Financial liabilities (excluding amounts shown under (k) and (l));

(n)

Liabilities and assets for current tax, as defined in IAS 12 Income Taxes;

(o)

Deferred tax liabilities and deferred tax assets, as defined in IAS 12;

(p)

Liabilities included in disposal groups classified as held for sale in accordance


with IFRS 5;

(q)

Non-controlling interests, presented within equity; and

(r)

Issued capital and reserves attributable to owners of the parent.

Current Assets
Current assets should have any of the following characteristics:
These are expected to be realised within the normal operating
cycle of the entity or within twelve months after the balance
sheet date whichever is higher ; examples are receivables, ,
advances, loans , etc. Financial instruments like available for
sale , held to maturity and loans which will be realised within a
period of twelve months from the date of balance sheet date.
These are intended for sale or consumption within the normal
operating cycle of the entity; example inventories.
These are held primarily for the purpose of trading ; example
Held for Trading Financial Instruments.
These are cash and cash equivalents. As per IAS-7 cash
comprises of cash on hand and demand deposits. Cash
equivalents are highly liquid investments that are readily
convertible to known amounts of cash , and which are
subjected to insignificant risk of changes in value.

Current Liabilities
Liabilities are classified as current liabilities
if these satisfy any of the following criteria:
These are expected to be settled in the entitys
normal operating cycle.
These are primarily held for trading.
These are due to be settled within a period of
twelve months from the balance sheet date.
The entity does not have an unconditional right
to defer settlement of the liability for at least
twelve months after the balance sheet date.

All other liabilities are classified as noncurrent liabilities.

Statement of
Comprehensive Income
Two-part Statement of Comprehensive Income
First part presents Statement of Income
Second part presents Statement of Other
Comprehensive Income

Two Separate Statements


Statement of Other Comprehensive Income
presents certain items of unrealised gain /
loss to be directly accounted for in the equity.
This statement intends to present the periodic
effect.

Statement of Income
There are two distinct presentation
styles of the Statement of Income
income statement portion can be either
presented by nature of expense or
function .

Classification of Expenses by
Nature
Income Statement
Revenue
Other Income
Changes in inventories of finished goods
and work in progress
Work performed by the entity and
capitalised
Raw material consumed
Employee Benefit Expenses
Depreciation and Amortisation Expenses
Impairment of Property , Plant and
Equipment and Intangible Assets
Other Expenses
Finance Costs
Share of profit of associates

2009

2008

Classification of Expenses by
Nature
Income Statement
Profit Before Tax
Income tax expense
Profit for the year from continuing
operations
Profit ( Loss) for the year from
discontinued operations
Profit for the year
Profit attributable to :
Owners of the entity
Non-controlling interest
Earning per share
Basic
Diluted

2009

2008

Classification of Expenses by Functions


2009

Revenue
Cost of sales
Gross Profit
Other Income
Distribution Costs
Administrative Expenses
Other Expenses
Finance Costs
Share of profit of associates

2008

Classification of Expenses by Functions


2009
Profit Before Tax
Income tax expense
Profit for the year from continuing
operations
Profit ( Loss) for the year from discontinued
operations
Profit for the year
Profit attributable to :
Owners of the entity
Non-controlling interest
Total Comprehensive Income attributable
to :
Owners of the entity
Non-controlling interest
Earning per share4
Basic
Diluted

2008

Statement of Other Comprehensive Income


2009
Profit for the Year
Other Comprehensive Income :
Exchange differences in translating foreign
operations
Gain ( loss) on fair value changes in
available for sale financial instruments
Gain (loss) fair value changes in Cash Flow
Hedges
Gain on Revaluation of Property , Plant and
Equipment
Actuarial Gain ( Loss) on defined benefit
pension plans
Share of other comprehensive income of
associates
Income tax relating to items of other
comprehensive income

2008

Statement of Other Comprehensive Income


2009
Other Comprehensive Income net of
tax
Total Comprehensive Income for the
year
Profit attributable to :
Owners of the entity
Non-controlling interest
Total Comprehensive Income
attributable to :
Owners of the entity
Non-controlling interest
Earning per share
Basic
Diluted

2008

Information to be presented on the face of the


Income Statement ( or Income Statement
portion of the Statement of Comprehensive
Income)
or in the Note
a. Write-downs of inventories to net realisable value as well as
reversals of such write downs
b. Write down of property , plant and equipment to recoverable
amount as well as reversals of such write downs
c. Restructuring activities of an entity and reversals of any
provisions for the costs of restructuring
d. Disposal of items of property, plant and equipment
e. Disposal of investments
f. Discontinued operations
g. Litigation settlements
h. Other reversals of provisions.

Statement of Changes in Equity


Paras 106-110 of IAS 1 set out the
principles for presentation of Statement of
Changes in Equity . This statement is
meant for depicting the movement in
equity during the accounting period. This
statement reflects
Various components of the equity with

separate presentation of non-controlling


interest ;
Distribution of total comprehensive income
during the year to various equity components
and non-controlling interest ;
Distribution to owners by way of dividend and
other transaction with owners like issue of
shares.

Statement of Changes in Equity


This statement makes reconciliation
of balances of various equity
components at the beginning and
end of the accounting period. Para
107 of IAS 1 particularly requires
disclosures of dividend recognised
and distributed either in the
Statement of Changes in Equity or in
Notes along with per share
information.