Download IAS 1 Presentation of Financial Statements

SEMINAR ON IFRS
by
THE INSTITUTE OF COMPANY SECRETARIES OF INDIA
WITH RELIANCE COMMUNICATIONS &
WIRC ICWAI
22nd AUGUST 2009
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THRU 50+ CITIES
AND 75+ RELIANCE VIDEO CONF
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SPEAKER :
Rammohan Bhave, CS, ICWA, CA
[email protected]
Dr Mrs Anjali Bhave, ICWA, Ph.D.
IAS 1 Presentation of Financial
Statements
Rammohan Bhave & Dr Anjali Bhave
[email protected] [email protected]
+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)
Property, plant and equipment;
Investment property;
(c)
(d)
Intangible assets;
Financial assets (excluding amounts shown under (e), (h)
and (i));
Investments accounted for using the equity method;
(e)
(f)
(g)
Biological assets;
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 entity’s
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 noncontrolling 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.