PRESENTATION OF PUBLISHED FINANCIAL STATEMENTS
IAS 1 lists some specific disclosures which must be made, either in the statement of financial position or in the related notes.
(a) Share capital disclosures (for each class of share capital) (i) Number of shares authorised
(ii) Number of shares issued and fully paid, and issued but not fully paid (iii) Par value per share, or that the shares have no par value
(iv) Reconciliation of the number of shares outstanding at the beginning and at the end of the year
(v) Rights, preferences and restrictions attaching to that class including restrictions on the distribution of dividends and the repayment of capital
PART B SINGLE COMPANY FINANCIAL ACCOUNTS 4: Presentation of published financial statements
75
(vii) Shares reserved for issuance under options and sales contracts, including the terms and amounts
(b) Description of the nature and purpose of each reserve within owners' equity
(c) The amount of any dividends proposed or declared after the reporting date but before the financial statements were authorised for issue
(d) The amount of any cumulative preference dividends not recognised
Section summary
IAS 1 suggests a format for the statement of financial position and specifies various items which must be shown in the statement.
3 The current/non-current distinction
Introduction
In this section we look at the requirements of IAS 1 to distinguish between current and non-current assets and liabilities in the statement of financial position.
3.1 The current/non-current distinction
An entity should present current and non-current assets and liabilities as separate classifications in the statement of financial position, except where a presentation based on liquidity provides more relevant and reliable information. If a presentation based on liquidity is used, all assets and liabilities must be
presented broadly in order of liquidity.
In either case, the entity should disclose any portion of an asset or liability which is expected to be recovered or settled after more than twelve months. For example, for an amount receivable which is due in instalments over 18 months, the portion due after more than twelve months must be disclosed.
3.2 Current assets
An asset should be classified as a CURRENT ASSET when it:
is expected to be realised in, or is held for sale or consumption in, the normal course of the entity's operating cycle; or
is held primarily for trading purposes; or
is expected to be realised within twelve months of the end of the reporting period; or is cash or a cash equivalent asset which is not restricted in its use
All other assets should be classified as non-current assets. (IAS 1)
3.3 Current liabilities
A liability should be classified as a CURRENT LIABILITY when it:
Is expected to be settled in the normal course of the entity's operating cycle; or Is held primarily for the purpose of trading; or
KEY TERM
76
4: Presentation of published financial statements PART B SINGLE COMPANY FINANCIAL ACCOUNTS Is due to be settled within twelve months after the reporting period; or
The entity does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period
All other liabilities should be classified as non-current liabilities. (IAS 1)
Section summary
An entity should present current and non-current assets and liabilities as separate classifications in the statement of financial position.
4 Statement of profit or loss and other comprehensive income
Introduction
Income and expenses are presented in the statement of profit or loss and other comprehensive income. This section looks at the requirements of IAS 1 for this statement.
4.1 Statement of profit or loss and other comprehensive income –
format
IAS 1 allows income and expense items to be presented either:
(a) in a single statement of profit or loss and other comprehensive income; or
(b) in two statements: a statement of profit or loss plus a separate statement of other comprehensive income
The suggested format for these statements follows. XYZ LIMITED
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 20X9 20X9 $’000 Revenue X Cost of sales X Gross profit X Other income X Distribution costs X Administrative expenses X Other expenses X Finance costs X
Profit before tax X
Income tax expense X
Profit for the year from continuing operations X Loss for the year from discontinued operations X
Profit for the year X
Other comprehensive income:
Available-for-sale financial assets X
Gains on property revaluation X
Income tax relating to components of other comprehensive income X Other comprehensive income for the year, net of tax X
PART B SINGLE COMPANY FINANCIAL ACCOUNTS 4: Presentation of published financial statements
77
Companies are given the option of presenting this information in two statements as follows: XYZ LIMITED
STATEMENT OF PROFIT OR LOSS FOR THE YEAR ENDED 31 DECEMBER 20X9 20X9 $’000 Revenue X Cost of sales X Gross profit X Other income X Distribution costs X Administrative expenses X Other expenses X Finance costs X
Profit before tax X
Income tax expense X
Profit for the year from continuing operations X Loss for the year from discontinued operations X
Profit for the year X
XYZ LIMITED
STATEMENT OF OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 20X9 20X9
$’000
Profit for the year X
Other comprehensive income:
Available-for-sale financial assets X
Gains on property revaluation X
Income tax relating to components of other comprehensive income X Other comprehensive income for the year, net of tax X
Total comprehensive income for the year X
Exam skills
In this Study Text, we have used the term ‘statement of profit or loss’ to refer to the section from revenue to profit for the year, whether or not that section is presented as part of a single statement of profit or loss and other comprehensive income or as a separate statement. In exam questions, you should make sure that you always call your statement the same name as the statement the examiner asks for in the question.
As a minimum, IAS 1 requires the following items to be disclosed in the statement of profit or loss and other comprehensive income:
(a) Revenue (b) Finance costs
(c) Share of profits and losses of associates and joint ventures accounted for using the equity method* (d) Pre-tax gain or loss attributable to discontinued operations
(e) Tax expense (f) Profit or loss
(g) Each component of other comprehensive income classified by nature (h) Share of the other comprehensive income of associates and joint ventures* (i) Total comprehensive income
* These items relate to group accounts.
IAS 1 also requires that any other line items, headings or sub-totals should be shown in the statement of