Chapter 3 - IAS 1 - Presentation of Financial Statements

Question 1

Statement of Financial Position

Answer 1

Deferred Tax balances should be reported as non-current items.

Question 2

Other comprehensive income

Answer 2

• Comprises items of income and expense which are not required by other IFRS to be recognized in profit or loss.
• Examples: changes in revaluation surplus measured in accordance with IAS 16 or IAS 38; remeasurements of defined benefit plans measured in accordance with IAS 19, gains and losses on remeasuring investments in equity instruments where an election has been made in accordance with IFRS 9.
• Choice of presentation - one statement with profit and loss or two statements.

Question 3

Current/non-current distinction (4 criteria for current)

Answer 3

Assets:

• the entity expects to use or sell the asset in its normal operating cycle
• it holds the asset primarily for trading rather than long-term usage within the business
• it expects to realize the asset (i.e. sell it for cash) within 12 months after the reporting period, or
• the asset is cash or a cash equivalent to which the entity has access within 12 months after the reporting period.

Liabilities

• the entity expects to settle the liability within its normal operating cycle
• it holds the liability primarily for trading purposes
• the liability is due to be settled within 12 months after the reporting period, or
• the entity has no unconditional rights to defer payment for at least 12 months after the reporting period.

Question 4

Statement of changes in equity

Answer 4

• The amount of dividends recognized in the period and the related amount per share should be disclosed either in this statement or in the notes.

Question 5

Materiality

Answer 5

• Items that are of importance to the users of the F/S in making economic decisions are considered ‘material’
• Material items should be separately identified within the F/S
• The entity should consider both the nature and relative size of the item when assessing materiality

Question 6

Comparative information

Answer 6

• If adjustments to prior periods have been made as a result of a change in accounting policy or of correction of errors, a statement of financial condition at the beginning of the previous period should be presented.

Question 7

Practice Statement - Management Commentary

Answer 7

• It is non-binding
• It is up to each individual regulatory regime to decide whether the requirements should be applied.
• However, it is considered best practice for those reporting under IFRSs.