Presentation of single entity published financial statements Flashcards
What is the key objective of financial statements?
- Provide useful info about the financial position, financial performance and cash flows of an entity to a wide range of users who are making economic decisions
- IAS 1 objective is to ensure comparability of financial statements with the entity’s financial statements of previous periods and with the financial statements of other entities. Under IAS 1, entity must present a complete set of financial statements (including comparative info) at least annually
What are components of a complete set of financial statements, per IAS 1?
- statement of financial position (i.e. balance sheet)
- statement of profit or loss and other comprehensive income
- statement of changes in equity
- statement of cash flows
- notes to the financial statements (summary of significant accounting policies and other explanatory notes)
What is meant by a current asset, a current liability and a non-current liability?
Current assets: sold, consumed or realised as part of the normal operating cycle. Also include assets held primarily for trading and the current portion of non-current financial assets
Non-current assets: all others
Current liability: under IAS 1 - expected to be settled within normal operating cycle; held primarily for purpose of trading; due to be settled within 12 months after the reporting period; not have unconditional right to defer settlement of the liability
Non-current liability: other
How does having an agreement to refinance and an unconditional right to defer settlement of the liability impact on an entity’s current/non-current classification?
- Debt under existing loan facility which is due to expire within 12 months of the year end is treated as current
- Becomes non-current if there is an agreement to refinance and if the lender has agreed, on or before the balance sheet date, to provide a period of grace lasting 12 months or more from the end of the reporting period, during which the lender is unable to enforce the repayment of the loan
What is included in statement of profit and loss?
Statement of profit or loss - all items of income or expense, except those recognised in OCI as required IFRS. IAS 1 lists:
(1) revenue; (2) finance costs; (3) share of profits and losses of associates and joint ventures accounted for using the equity method; (4) single amount for the total of discontinued operations; (5) tax expense; (6) total for profit and loss; (7) gains and losses from the de-recognition of financial assets measured at amortised cost
What is in OCI?
OCI - all items that cannot be included in the SOP&L:
(1) changes in revaluation surplus on long-term assets; (2) actuarial gains and losses on re-measurement of defined benefit plans; (3) exchange differences (gains and losses) arising from the transaction of the financial statements of a foreign operation; (4) certain gains and losses relating to financial instruments, including on certain instruments used for hedging; (5) correction of prior period errors and the effect of changes in accounting policies
What is the primary purpose of the statement of cash flows?
Provide info about company’s gross receipts and gross payments for a specific period of time. Per IAS 7, cash flows are classified under operating, investing and financing activities. Statement shows movement of money in or out of business. Highlights activities that directly and indirectly affect a company’s overall cash performance.
