Cfas Presentation of FS

Presentation of Financial Statements
Related standard: PAS 1 Presentation of Financial Statements
Learning Objectives
• Enumerate and describe the general features of financial
statement presentation.
• Enumerate and describe the components of a complete set of
financial statements.
• State the acceptable methods of presenting comprehensive
income in the financial statements.
• Differentiate between the statement of profit or loss and other
comprehensive income and the statement of changes in equity.
• State the relationship of the notes to the financial statements
with the other components of a complete set of financial
statements.
Objective of PAS 1
PAS 1 prescribes the basis for presentation of

general purpose financial statements to improve
comparability both with the entity's financial
statements of previous periods and with the financial
statements of other entities.
• General purpose financial statements are those intended to serve users
who do not have the authority to demand financial reports tailored for
their own needs. General purpose financial statements are those
statements that cater to most of the common needs of a wide range of
external users. General purpose financial statements are the subject
matter of the Conceptual Framework and the PFRSs.
• Types of comparability
1. Intra-comparability
2. Inter-comparability
Complete set of financial statements
1. Statement of financial position
2. Statement of profit or loss and other comprehensive
income
3. Statement of changes in equity
4. Statement of cash flows
5. Notes
(5a) comparative information in respect of the preceding
period; and
6. 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, or when it
reclassifies items in its financial statements.
General features
1. Fair Presentation and Compliance with PFRSs - The application of

PFRSs, with additional disclosure when necessary, is presumed to result in
financial statements that achieve a fair presentation.
2. Going concern - An entity is not a going concern if, as of financial

reporting date or prior to the date of authorization of financial statements
for issue, management either
a. Intends to liquidate the entity or to cease trading, or
b. Has no realistic alternative but to do so.
• The assessment of going concern is at least 12 months.
General features (Continuation)
3. Accrual Basis of Accounting - An entity shall prepare its financial

statements, except for cash flow information, using the accrual basis of
accounting.
4. Materiality & Aggregation - Each material class of similar items must be

presented separately in the financial statements.
5. Offsetting - Assets and liabilities, and income and expenses, shall not be
offset unless required or permitted by a PFRS.
• Measuring assets net of valuation allowances, for example,
obsolescence allowances on inventories, allowances for doubtful
accounts on receivables, and accumulated depreciation on property,
plant, and equipment are not offsetting.
6. Frequency of reporting – An entity shall present a complete set of

financial statements (including comparative information) at least
annually.
• When an entity changes the end of its reporting period and presents
financial statements for a period longer or shorter than one year, an
entity shall disclose the following,
1. The period covered by the financial statements:
2. The reason for using a longer or shorter period, and
3. The fact that amounts presented in the financial statements are not
entirely comparable.
7. Comparative Information
An entity shall present comparative information in respect of the
preceding period for all amounts reported in the current period’s financial
statements, unless other standards permit or require otherwise.
8. Consistency of presentation - An entity shall retain the presentation

and classification of items in the financial statements from one period to
the next unless:
a. it is apparent that another presentation or classification would
be more appropriate following a significant change in the nature
of the entity’s operations or a review of its financial statements;
or
b. a PFRS requires a change in presentation.
IFA PART 3: Zeus Vernon B. Millan

Additional Statement of financial position
• A statement of financial position as at the beginning of the preceding

period shall be presented when an entity
1. Applies an accounting policy retrospectively or
2. Makes a retrospective restatement of items in its financial
statements, or
3. When it reclassifies items in its financial statements.
Statement of financial position
• A statement of financial position may be presented as either

1. Classified (current/non-current distinction) – showing current and
noncurrent assets and liabilities, or
2. Unclassified (based on liquidity) – showing no distinction between current
and noncurrent items
Current Assets
• An entity shall classify an asset as current when:

1. it expects to realize the asset or intends to sell or consume it, in its
normal operating cycle;
2. it holds the asset primarily for the purpose of trading;
3. it expects to realize the asset within twelve months after the
reporting period; or
4. 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 twelve
months after the reporting period.
Current Liabilities
• An entity shall classify a liability as current when:

1. it expects to settle the liability in its normal operating cycle;
2. it holds the liability primarily for the purpose of trading;
3. the liability is due to be settled within twelve months after the
reporting period; or
4. the entity does not have an unconditional right to defer settlement
of the liability for at least twelve months after the reporting period.
Currently maturing long-term liabilities
• General rule: Currently maturing long term liabilities are presented as

current liabilities.
• Exceptions:
1. Refinancing agreement fully completed on or before the balance sheet
date – non-current liability
2. Refinancing agreement after the balance sheet date but before the
financial statements are authorized for issue – non-current liability if
the refinancing is at the discretion of the entity.
Breach of loan agreement
• General rule: A liability that is payable on demand is a current

liability.
• Exception: It is presented as non-current liability if the lender

provides the entity, on or before the balance sheet date, a grace
period ending at least 12 months after the balance sheet date to
rectify a breach of loan covenant.
Presentation of Deferred taxes
• Deferred tax liabilities (assets) shall be presented as noncurrent items

in a classified statement of financial position, irrespective of their
expected dates of reversal.
Minimum line items in the statement of financial position
a. Property, plant and equipment;
b. Investment property;
c. Intangible assets;
d. Financial assets (excluding amounts shown under (e), (h) and (i));
e. Investments accounted for using the equity method;
f. Biological assets;
g. Inventories;
h. Trade and other receivables;
i. Cash and cash equivalents;
j. Assets classified as held for sale (Groups classified as held for sale) in
accordance with PFRS 5;
Minimum line items (Continuation)
k. Trade and other payables;
l. Provisions;
m. Financial liabilities (excluding amounts shown under (k) and (l));
n. Liabilities and assets for current tax, as defined in PAS 12 Income
Taxes;
o. Deferred tax liabilities and deferred tax assets, as defined in PAS 12;
p. Liabilities included in disposal groups classified as held for sale in
accordance with PFRS 5;
q. Non-controlling interests, presented within equity; and
r. Issued capital and reserves attributable to owners of the parent
Order/ Format of Presentation
• PAS 1 does not prescribe the order or format in which an entity

presents items.
Statement of profit or loss and other
comprehensive income
• An entity shall present all items of income and expense recognized in

a period:
1. in a single statement of profit or loss and other comprehensive
income; or
2. in two statements: (1) a statement displaying the profit or loss
section only (separate ‘statement of profit or loss’ or ‘income
statement’) and (2) a second statement beginning with profit or
loss and displaying components of other comprehensive income.
Extraordinary items
• PAS 1 prohibits the presentation of any items of income or expense

as extraordinary items in the in the statement(s) presenting profit or
loss and other comprehensive income or in the notes.
Other comprehensive income for the period
a. Changes in revaluation surplus

b. Unrealized gains and losses on investments in FVOCI securities
c. Remeasurements of the net defined benefit liability (asset)
d. Gains and losses arising from translating the financial statements
of a foreign operation
e. Effective portion of gains and losses on hedging instruments in a
cash flow hedge
• OCI may be presented either (a) net of tax or (b) gross of tax.
Reclassification adjustments
• Reclassification adjustments are amounts reclassified to profit or loss in
the current period that were recognized in other comprehensive income
in the current or previous periods.
Total comprehensive income
• Total comprehensive income comprises all components of

1. Profit or loss; and
2. Other comprehensive income.
Presentation of Expenses
1. Nature of expense method

2. Function of expense method
• If an entity classifies expenses by function, it shall disclose additional

information on the nature of expenses
Disclosure of dividends
• Dividends declared by an entity are disclosed either in the (a) notes

or (b) statement of changes in equity.
Order of presentation of disclosures in the
Notes
1. Statement of compliance with PFRSs;

2. Summary of significant accounting policies applied;
3. Supporting information for items presented in the other financial
statements; and
4. Other disclosures.

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Presentation of Financial Statements

Related standard: PAS 1 Presentation of Financial Statements

PAS 1 prescribes the basis for presentation of

1. Fair Presentation and Compliance with PFRSs - The application of

2. Going concern - An entity is not a going concern if, as of financial

3. Accrual Basis of Accounting - An entity shall prepare its financial

4. Materiality & Aggregation - Each material class of similar items must be

6. Frequency of reporting – An entity shall present a complete set of

8. Consistency of presentation - An entity shall retain the presentation

IFA PART 3: Zeus Vernon B. Millan

• A statement of financial position as at the beginning of the preceding

• A statement of financial position may be presented as either

• An entity shall classify an asset as current when:

• An entity shall classify a liability as current when:

• General rule: Currently maturing long term liabilities are presented as

• General rule: A liability that is payable on demand is a current

• Exception: It is presented as non-current liability if the lender

• Deferred tax liabilities (assets) shall be presented as noncurrent items

• PAS 1 does not prescribe the order or format in which an entity

• An entity shall present all items of income and expense recognized in

• PAS 1 prohibits the presentation of any items of income or expense

a. Changes in revaluation surplus

• Total comprehensive income comprises all components of

1. Nature of expense method

• If an entity classifies expenses by function, it shall disclose additional

• Dividends declared by an entity are disclosed either in the (a) notes

1. Statement of compliance with PFRSs;

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