The statement of financial position
4.4 The statement of changes in equity
The statement of changes in equity should include: [IAS 1.106] total comprehensive income for the period, showing separately the amounts due to owners of the parent and to non-controlling interests; for each component of equity the effect of any change in accounting policy or of any correction of errors; for each component of equity a reconciliation of the carrying amount at the beginning and the end of the period, separately disclosing changes resulting from: o profit or loss; o each item of other comprehensive income; and o transactions with owners in their capacity as owners, showing separately contributions by them e.g. an issue of shares for cash and distributions to them e.g. dividends paid. In addition, information should be disclosed either in the statement of changes in equity or in the notes, in respect of the amount of dividends recognised in the period and the related amount per share. [IAS 1.107] An illustrative statement of changes in equity is included in the Guidance accompanying the standard.4.5 The statement of cash flows
Cash flow information provides users of the financial statements with information to assess an entity’s ability to generate cash and how it utilises the cash in its operations. Requirements for the preparation of a statement of cash flows are set out in IAS 7 Statement of cash flows.4.6 Notes
The notes provide additional relevant information to ensure that users fully understand the financial statements of an entity. Notes can be in a number of forms, for example narrative disclosures, disaggregation of information presented elsewhere in the financial statements or additional information which has not been presented elsewhere in the financial statements but Chapter 3 – Presentation of Financial Statements Page 41 is relevant to the understanding of any of them. [IAS 1.112] The notes should present information about the basis of preparation of the financial statements and set out the specific accounting policies followed and judgements made by management in applying them. In addition, information should be provided on the key assumptions made by management concerning the future and the uncertainty of estimates that have been made, which may lead to significant adjustments having to be made in the next financial year. In such circumstances information should be provided on the nature of these items and their carrying amount at the end of the reporting period. The notes should be presented in a systematic order, for example following the order in which items are presented elsewhere in the financial statements, and there should be full cross referencing between the individual statements and the notes. Specific information should be included in the notes about the overall entity, for example the country of incorporation, domicile, the legal form of the entity and its registered address. A description of the nature of the entity’s operations and its principal activities along with the name of its parent and, where appropriate, the ultimate parent of the group should be provided. Information should also be provided on dividends that were proposed or declared before the financial statements were authorised for issue but have not been recognised as a distribution in the period, with disclosure of the related amount per share and the amount of any cumulative preference dividend not recognised. [IAS 1.137, 1.138] 5 Overall Considerations Much of the material covered in the rest of this chapter on IAS 1 details the specific application within financial statements of the general principles dealt with in the IASB Framework.5.1 Fair presentation and compliance with IFRS
IAS 1 requires that the financial statements should present fairly the financial position, financial performance and cash flows of the entity. Fair presentation is defined as representing faithfully the effects of transactions, other events, and conditions in accordance with the definitions and recognition criteria in the IASB Framework. Under IAS 1 application of international standards along with any relevant interpretations and disclosures is presumed to result in a fair presentation. [IAS 1.15] To achieve fair presentation in a set of financial statements an entity should also select and apply the most appropriate accounting policies in accordance with IAS 8 Accounting policies, changes in accounting estimates and errors. An entity cannot simply rectify the inappropriate use of accounting policies through disclosure. [IAS 1.18] If a set of financial statements complies with International Financial Reporting Standards IFRS, then those financial statements should include an explicit and unreserved statement to that effect. Such disclosure can only be made when the financial statements comply with all IFRS requirements; management is not permitted to cherry pick requirements. [IAS 1.16] IAS 1 sets out procedures to be followed when management concludes that compliance with an IFRS would be so misleading as to conflict with the objectives of the financial statements as set out in the IASB Framework. It is thought that in practice such circumstances are likely to be extremely rare. If, however, such circumstances did exist, then management should depart from the particular requirement, provided that to do so would not be inconsistent with the regulatory framework in which the entity operates. If there has been a departure from an international standard, then this should be fully explained, setting out the circumstances that led to the departure, quantifying the effect on all periods reported and stating specifically what the departure is. Disclosure is also required if a departure arose in the previous period but still affects the financial statements of the current period. [IAS 1.19 – 21]Parts
» The International Accounting Standards Committee IASC
» The International Organisation of Securities Commissions IOSCO
» The Financial Accounting Standards Board FASB
» The Committee of European Securities Regulators CESR
» The IASB FINANCIAL REPORTING CONTEXT
» The Standards Advisory Council SAC
» The International Financial Reporting Interpretations Committee IFRIC
» The standard-setting process THE IFRS FRAMEWORK
» Preface to International Financial Reporting Standards
» Definition THE IFRS FRAMEWORK
» Financial statements THE IFRS FRAMEWORK
» Economic decisions Users and their information needs
» Accountability of management THE IFRS FRAMEWORK
» Financial position, performance and changes in financial position
» Underlying assumptions THE IFRS FRAMEWORK
» Understandability Qualitative characteristics of financial statements
» Relevance Qualitative characteristics of financial statements
» Reliability Qualitative characteristics of financial statements
» Definitions of elements Elements of financial statements
» Recognition of elements in financial statements Measurement in financial statements
» The statement of financial position
» The statement of comprehensive income
» Currentnon-current distinction PRESENTATION OF FINANCIAL STATEMENTS
» Notes PRESENTATION OF FINANCIAL STATEMENTS
» Fair presentation and compliance with IFRS
» Comparative information Other considerations
» Additional disclosures Other considerations
» ACCOUNTING POLICIES IFRSs) Learning Materials
» Servicing fees included in the price of the product
» Cost of inventories INVENTORIES
» Cost formulae Net realisable value NRV
» Initial recognition and elements of cost
» Self-constructed assets PROPERTY, PLANT AND EQUIPMENT
» Ceasing recognition of costs
» Subsequent expenditure PROPERTY, PLANT AND EQUIPMENT
» Depreciation and revalued assets
» Which costs should be capitalised?
» When should capitalisation of borrowing costs commence?
» Suspension of capitalisation BORROWING COSTS
» Ceasing capitalisation BORROWING COSTS
» Non-monetary government grants GOVERNMENT GRANTS
» Repayment of government grants
» No specific relation to operating activities
» Proposed revision of standard
» Changes of plan NON-CURRENT ASSETS HELD FOR SALE
» Nature of investment properties Scope
» Initial recognition INVESTMENT PROPERTY
» Measurement after recognition INVESTMENT PROPERTY
» Applicable to both the fair value model and the cost model
» The cost model INVESTMENT PROPERTY
» Separately acquired intangible assets
» Exchanges of assets INTANGIBLES
» Intangible assets acquired as part of a business combination
» The research phase INTANGIBLES
» The development phase INTANGIBLES
» The cost of internally generated intangible assets
» Stage 1 – Indicators of impairment
» Stage 2 – Measuring recoverable amount
» Stage 3 – Recognising an impairment loss
» Future operating losses Provisions
» Contingent liabilities and contingent assets
» Best estimate PROVISIONS AND CONTINGENCIES
» Present value PROVISIONS AND CONTINGENCIES
» Other measurement points PROVISIONS AND CONTINGENCIES
» Reimbursements PROVISIONS AND CONTINGENCIES
» Decommissioning, restoration and environmental funds
» Waste management costs PROVISIONS AND CONTINGENCIES
» Carrying amount versus tax base Calculate the temporary difference
» Determining deferred tax TAXATION
» Revaluations Recognition criteria: further issues
» The expected manner of recovery of an asset
» Annual review Recognition criteria: further issues
» Discounting Recognition criteria: further issues
» Temporary differences and investments
» Other related disclosures TAXATION
» Risks and rewards Situations indicating the existence of a finance lease
» Initial recognition Finance lease recognition
» Depreciation Finance charge Finance lease recognition
» Actuarial method Methods of allocating finance charges
» Disclosures for finance leases
» Operating lease incentives Accounting treatment of operating leases
» Disclosures for operating leases
» Disclosure by a lessor for finance lease arrangements
» Disclosure by a lessor for operating lease arrangements
» Operating lease incentives Operating leases
» An overview All short-term benefits
» Short-term compensated absences Profit-sharing and bonus plans
» Recognition and measurement Disclosure
» The discount rate Movements during the period
» Variations in actuarial assumptions
» Past service costs Sundry considerations
» Curtailments and settlements Sundry considerations
» Minimum funding requirements and the limit on a defined benefit asset
» Disclosure and presentation of defined benefit plans
» Share-based payment transactions – cash-settled or equity-settled
» Group and treasury share transactions
» Objectives, scope and definitions of IFRS 2 Disclosure requirements
» EVENTS AFTER THE REPORTING PERIOD
» The functional currency FOREIGN EXCHANGE
» The presentation currency FOREIGN EXCHANGE
» Monetary and non-monetary items
» Summary of the approach of IAS 21
» Initial recognition FOREIGN EXCHANGE
» Reporting at the ends of subsequent reporting periods
» Transactions settled within the period
» Transaction balance is outstanding at the end of the reporting period
» Net Investment in a Foreign Operation
» Change in Functional Currency
» Translation of a foreign operation
» Disposal of a foreign operation
» Settlement options FOREIGN EXCHANGE
» Compound financial instruments FOREIGN EXCHANGE
» Financial assetliability at fair value through profit or loss
» Held-to-maturity investments Loans and receivables
» Available-for-sale financial assets Financial assets
» IFRIC 2 Members’ shares in co-operative entities and similar instruments
» Derecognition in its entirety Continuing involvement after a transfer
» Financial liabilities FOREIGN EXCHANGE
» Qualifying for hedge accounting
» Fair value hedge Cash flow hedge
» Hedge of a net investment in a foreign operation
» Objectives and Scope of IFRS 7
» Fair value Other disclosures
» Statement of comprehensive income Nature and extent of risks
» Objective and scope What is cash?
» The direct method FOREIGN EXCHANGE
» Indirect method FOREIGN EXCHANGE
» Non-cash transactions FOREIGN EXCHANGE
» Additional disclosures FOREIGN EXCHANGE
» Identifying segments FOREIGN EXCHANGE
» Reportable segments FOREIGN EXCHANGE
» Reporting formats FOREIGN EXCHANGE
» Discontinued operations Disclosure Prior periods
» Contents Form FOREIGN EXCHANGE
» Selected explanatory notes FOREIGN EXCHANGE
» Impairment in the interim period
» Calculating earnings FOREIGN EXCHANGE
» Calculating the weighted average number of ordinary shares
» Calculation of earnings Calculation of the weighted average number of shares
» Related parties FOREIGN EXCHANGE
» Contract revenue FOREIGN EXCHANGE
» Contract costs FOREIGN EXCHANGE
» Stage of completion FOREIGN EXCHANGE
» Reliable measurement FOREIGN EXCHANGE
» Loss making contracts FOREIGN EXCHANGE
» Key Concepts FOREIGN EXCHANGE
» Valuation of assets Disclosure
» What is an insurance contract?
» Scope of consolidated financial statements
» Special purpose entities FOREIGN EXCHANGE
» Basic approach FOREIGN EXCHANGE
» Reporting dates and consistent accounting policies
» The statement of financial position The statement of comprehensive income
» Gain or loss on net monetary position
» Introduction Statement of cash flows
» Initial application of IAS 29
» Identifying a business combination
» Acquisition method of accounting
» General principle FOREIGN EXCHANGE
» Specific issues FOREIGN EXCHANGE
» A business combination achieved in stages
» Subsequent accounting for contingent consideration
» Classifying and measuring the identifiable net assets acquired
» Initial recognition and subsequent adjustments
» Subsequent measurement FOREIGN EXCHANGE
» Recognition and measurement of goodwill
» Gain on bargain purchase Adjustments to provisional values
» Impairment losses FOREIGN EXCHANGE
» Jointly controlled operations FOREIGN EXCHANGE
» Proportionate consolidation Equity method
» Jointly controlled assets Investors separate financial statements
» Transactions between a venturer and a joint venture
» Operators of joint ventures Investors of a joint venture
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