Lecture 16 - Published Accounts Of Companies Flashcards
The annual reports for a company can be broken down into two main sections, what are they?
- The financial data.
2. The narrative.
The format of the statement of comprehensive income and the balance sheet must comply with…
IAS 1 and/or national statutory requirements
The minimum information content on the face of the statement of comprehensive income includes:
- revenue
- finance costs
- impairment losses
- share of profit or loss of associate ventures
- profit or loss
- total comprehensive income
IAS 1 requires an entity to present an analysis of expenses classified either by their…
Function or nature
Classifying expenses by function refers to…
Grouping expenses such as manufacturing, research and development and admin into groups such as Cost Of Sales, administrative expenses and Distribution Costs
Classifying expenses due to their nature refers…
To grouping expenses into nature’s such as depreciation, amortization, raw materials etc
If an entity chooses to analyze expenses by function, they must also provide…
Additional information on the nature of the expenses
If expenses are grouped by function, administrative costs refer to… and include…
All other costs arising from ordinary activity but not classified as either COGS or distribution costs.
Included in administrative costs are:
- salaries
- pensions
- costs associated with the premises
- amount written off the receivables
- professional fees
‘Other income or expense’ refers to…
Income or expense derived from ordinary activities that are not normally included in the revenue or other cost figures and includes things such as royalties and commissions.
If items of income or expense are material…
An entity shall disclose their nature and amount separately
Examples of items that require separate disclosure include…
- the write down of assets
- restructuring activities
- Disposal of PPE
- discontinued operations
- litigation settlements
What is the definition of ‘discontinued operations’?
Operations that represent a major line of business or geographical area that are no longer running. An operation is classified as discontinued when the carrying amount will be recovered principally through a sale rather than continuing use and it is available for immediate sale.
In regards to discontinued operations, what 2 figures must be included?
- Post-tax profit or loss on discontinued operations.
2. Post-tax gain or loss on measurement to “fair value less cost of sale”.
IAS 1 does not stipulate a single way for the balance sheet to be organized however, give one example of how some firms do organize it
In order of liquidity
Name 5 things that must be included in the balance sheet
- PPE
- investment property
- intangible assets
- financial assets
- trade and other receivables
- inventories
- cash and cash equivalents
- provisions
What is the U.K. format of the balance sheet?
Fixed assets + current assets - current liabilities = total assets less current liabilities - non current liabilities = total net assets = shareholders equity
Under IFRS 14, firms with different segments are required to report segments on 2 bases, what are they?
- Related products and services
2. Geographical area
Information on a segment must be presented if the value of its…
Sales, profit or loss or assets exceed 10% of all operating segments
Give two cons of disclosing commercially sensitive information about segments.
- Competitors can identify areas of high or low profitability.
- Unions can ‘drill down’ in the same way
What is the ‘statement of changes in equity’?
The statement of changes in equity reports all movements that can affect the change in shareholders equity during the period p
The statement of changes in equity includes information pertaining to:
- total comprehensive income
- changes in accounting policy that effect the way equity is calculated
- dividends paid during the year
- changes in share capital (new issue, share options granted, repurchase of shares)
