L2 | IAS1 | Presentation Of Financial Statements

Question 1

Under IAS1, what does a complete set of financial statements comprise of?

Answer 1

• a statement of financial position as at the end of the period
• a statement of profit or loss ad other comprehensive income for the period
• a statement of changes in equity for the period
• a statement of cash flows for the period
• notes, comprising significant accounting policies and other explanatory information
• a statement of financial position as at the beginning of the preceding period when an entity applies an accounting policy retrospectively or makes a retrospective restatement of items in its financial statements

Question 2

As a minimum, the face of the statement of financial position should include what separate line items?

Answer 2

1. Property, Plant and Equipment
2. Investment Property
3. Intangible Assets
4. Financial Assets (excluding amounts shown under 5,8 and 9)
5. Investments accounted for using the equity method
6. Biological Assets
7. Inventories
8. Trade and Other Receivables
9. Cash and Cash Equivalents
10. 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 Discounted Operations)
11. Trade and Other Payables
12. Provisions
13. Financial liabilities (excluding amounts shown under 11 and 12)
14. Liabilities and Assets for current tax
15. Deferred tax liabilities and deferred tax assets
16. Liabilities included in disposal groups classified as held for sale in accordance with IFRS 5
17. Non-controlling interests, presented within equity
18. Issued capital and reserves attributable to owners of the parent

Question 3

When should an asset be classified as a current asset?

Answer 3

• it expects to realise the asset, or intends to sell or consume it, in its normal operating cycle
• it holds the asset primarily for the purpose of trading
• it expects to realise the asset within 12 months after the reporting period
• the asset is cash or a cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period.
  [only one condition has to be met to classify an asset as a current asset]

Question 4

When should a liability be classified as a current liability?

Answer 4

When it satisfies ANY of the following criteria:
- it is expected to be settled in the entity’s normal operating cycle
- it is held primarily for the purpose of being traded
- it is due to be settled within 12 months after the balance sheet date
- the entity does not have an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.

Question 5

What information should an entity provide about entity?

Answer 5

1. For each class of share capital:
   * the number of share authorized
   * the number of shares issued and fully paid and issued but not fully paid
   * par value per share or that the shares have no par value
   * a reconciliation of the number of shares outstanding at the beginning and at the end of the period
   * the rights, preference and restrictions attatching to that class, including restrictions on the distribution of dividends and the repayment of the capital
   * shares in the entity, held by the entity or by its subsidiaries or associates
   * shares reserved for issue under options and contracts for the sale of shares including the terms and the amounts
2. A description of the nature and purpose of each reserve within equity. Entries wihtout share capital (e..g partnerships) are required to present equivalent information

Question 5

What information should an entity provide about entity?

Answer 5

1. For each class of share capital:
   * the number of share authorized
   * the number of shares issued and fully paid and issued but not fully paid
   * par value per share or that the shares have no par value
   * a reconciliation of the number of shares outstanding at the beginning and at the end of the period
   * the rights, preference and restrictions attatching to that class, including restrictions on the distribution of dividends and the repayment of the capital
   * shares in the entity, held by the entity or by its subsidiaries or associates
   * shares reserved for issue under options and contracts for the sale of shares including the terms and the amounts
2. A description of the nature and purpose of each reserve within equity. Entries wihtout share capital (e..g partnerships) are required to present equivalent information

Question 6

How does an entity present all items of income and expense recognized in a period?

Answer 6

Either in:
* in a single statment of profit or loss and other comprehensible income
* in 2 statements: a statement displaying components of profit or loss (separate income statement) and a second statement beginning with profit or loss and displaying components of other comprehensive income (statement of comprehensible income)

other comprehensive income = e.g. revaluation

Question 7

What is included in the profit or loss section?

Answer 7

• revenue
• finance costs
• share of the profit or loss of associates and joint ventures accounted for using the equity method
• tax expense
• a single amount for the total of discounted operations

Question 8

What is included in the other comprehensive income section?

Answer 8

• revaluation gains and losses
• gains and losses from financial assets designed at fair value through other comprehensive income
• exchange differences on translating foreign operations
• remeasurements of defined benefit pension plans

Question 9

What are the sections in the Statement of Changes in Equity?

Answer 9

• share capital
• retained earnings
• revaluation surplus

Question 10

What is the formula for cost of sales?

Answer 10

opening stock + purchases - closing stock

Question 11

What does a Statement of Financial Position look like?

Answer 11