CA. Amit Daga (Finance Controller CA. CS. CFA. CIFRS. M.COM. ) (9017 Points)
26 January 2015Dear All, I would like to start discussion on IFRS,
In every 2-3 days i will try to give summary of one standard, Why not we should discuss on the same. If any one like to add its always welcome and if any one have any query, They can raise we can have a discussion.
CA. Amit Daga
(Finance Controller CA. CS. CFA. CIFRS. M.COM. )
(9017 Points)
Replied 26 January 2015
IAS 1 – Presentation of Financial Statements
IAS 1 sets the requirements for presentation of financial statements, gives guidance on the structure and form of financial statements and sets the minimum requirements for their content.
IAS 1 does NOT deal with recognition, measurement and specific disclosures for various types of transactions – these aspects are covered by other IASs / IFRSs.
IAS 1 explains the general features of financial statements, such as
• Fair presentation and compliance with IFRS,
• Going concern
• Accrual basis of accounting,
• Materiality and aggregation,
• Offsetting
• Frequency of reporting
• Comparative information
• Consistency of presentation.
The complete set of financial statements compliant with IFRS comprises 5 elements:
• a statement of financial position as at the end of the period
• 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 containing a summary of significant accounting policies and other explanatory information.
Statement of Financial Position
IAS 1 requires presentation of classified statement of financial position where current assets or liabilities are separated from non-current assets or liabilities. Basically, the asset or liability is current when it is expected to be recovered or settled within 12 months (One business Cycle) after the reporting period. With regard to a minimum content, the following line items shall be presented:
ASSETS EQUITY AND LIABILITIES
Property, plant and equipment Issued capital and reserves attributable to owners of the parent
Investment property
Intangible assets Non-controlling interests
Financial assets Financial Liabilities
Investments Provisions
Biological assets
Inventories
Trade and other receivables Trade and other payables
Cash and cash equivalents
Current tax assets Current tax liabilities
Deferred tax assets Deferred tax liabilities
IAS 1 does NOT prescribe the precise format of the statement of financial position. Instead, several formats are acceptable if they fulfill all requirements outlined above.
Statement of Comprehensive Income
The statement of comprehensive income has 2 basic elements:
• Profit or loss for the period: here, all items of income and expenses must be recognized.
• Other comprehensive income: items recognized directly to equity or reserves, such as changes in revaluation surplus, gains or losses from subsequent measurement of available-for-sale financial assets, etc.
As a minimum, the statement of comprehensive income must contain the following items:
PROFIT OR LOSS
Revenue
Gains and losses arising from the derecognition of financial assets at amortized cost
Finance costs
Share of the profit or loss of associates and joint ventures accounted for using the equity method
Tax expense
Post-tax profit/gain or loss of operations or assets in accordance with IFRS 5 (Non-current assets Held for Sale and Discontinued Operations)
Profit or loss
OTHER COMPREHENSIVE INCOME
Each component of other comprehensive income classified by nature
Share of the other comprehensive income of associates and joint ventures accounted for using equity method
Total comprehensive income
As opposed to US GAAP, IAS 1 prohibits to report any transaction or item as extraordinary items.
Profit or loss for the period, as well as total comprehensive income shall be both presented in allocation:
• Attributable to non-controlling interests and
• Attributable to owners of the parent.
The entity might choose to classify expenses recognized in profit or loss for the period
• by their nature or
• by their function.
IAS 1 requires disclosure of certain items separately, either in the statement of comprehensive income, or in the notes. These items are as follows:
• write-downs of inventories and property, plant and equipment, their reversals,
• restructuring of activities and reversals of related provisions,
• disposals of property, plant and equipment,
• disposals of investments,
• discontinuing operations,
• litigation settlements and
• other reversals of provisions.
Statement of Changes in Equity
As a minimum, the statement of changes in equity must contain the following items:
• total comprehensive income for the period, showing separately amounts attributable to owners of the parent and to non-controlling interests
• the effect of retrospective application or restatement for each component of equity (if applicable)
• the reconciliation between the carrying amount at the beginning and the end of the period for each
component of equity. Here, the following changes shall be disclosed separately:
o those resulting from profit or loss
o resulting from other comprehensive income
o resulting from transactions with owners (contributions, distributions and changes in ownership)
Also, IAS 1 prescribes to present amount of dividends recognized as distributions and the related amount per share on the face of the statement of changes in equity or in the notes.
Notes to the Financial Statements
The notes are meant to be the document accompanying numerical financial statements listed above. They should provide additional information not contained in the numbers, the basis of preparation of the financial statements and some additional information that might be relevant.
IAS 1 sets that the notes shall contain a statement of compliance with IFRS, summary of significant accounting policies applied, supporting information for the numbers presented in the financial statements and other disclosures.
Ki$hor B
(Training & Advisory)
(3015 Points)
Replied 26 January 2015
Nice initiative!
Since you intend to post summary of IAS / IFRS, am wondering if you could suggest a book from which one could read the Standard & the illustrations too.
CA. Amit Daga
(Finance Controller CA. CS. CFA. CIFRS. M.COM. )
(9017 Points)
Replied 26 January 2015
Kishore whats the purpose, if you want to read for implementation you can go for manual of accounting - pwc but if you want for your knowledge or exam purpose than you can go for summary which you will get in internet
Ki$hor B
(Training & Advisory)
(3015 Points)
Replied 26 January 2015
Your question "Whats the purpose?" is interesting by far.
Am not in to implementation. Have seen employees being sent for IFRS training
& this trend began long time ago. Intend to be at par with them if not ahead of the pack.
Am wondering whehther Ind AS and IFRS are similar?
CA. Amit Daga
(Finance Controller CA. CS. CFA. CIFRS. M.COM. )
(9017 Points)
Replied 27 January 2015
Ind AS is nothing its Indian Version of IFRS. Instead of adopting IFRS as its we converged IFRS as per our requirement and named as IND AS. Upto 90% its inline of IFRS
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