PRESENTATION

OF FINANCIAL
STATEMENTS
IAS 1
UNIT OBJECTIVES
 List the individual statements that, according to IAS 1, together form the financial
statements of a reporting entity;
 Explain what is meant by the identification of financial statements;
 Explain what is meant by reporting period;
 Explain what is meant by the operating cycle;
 Explain which items comprise current assets and which comprise current liabilities,
according to IAS 1;
 List the items that must be presented on the face of the statement of financial position
and statement of profit or loss and other comprehensive income respectively by
referring to IAS 1;
 List the items that can, according to IAS 1, be presented on either the face of the
statement of financial position and statement of profit or loss and other
comprehensive income or in the notes for the financial period;
 Discuss the purpose of notes by referring to IAS 1;
OBJECTIVE OF IAS 1
 Prescribe the basis of the presentation of general-
purpose financial statements, sets out the overall
requirements for the presentation of financial
statements, provides guidelines for their structure
and minimum requirements
 PURPOSES OF PREPARING
FINANCIAL STATEMENT
 IAS 1 .9 describes financial statements as structured representations of the financial
position, financial performance and cash flows of an entity that is useful to a wide range of
users in making economic decisions.
 Financial statements not only provide information to users but also show the result of
management’s stewardship of the resources entrusted to them.
 To meet its purpose, financial statements provide information about an entity’s:
 Assets;
 Liabilities;
 Equity;
 Income and expenses, including gains and losses;
 Other changes in equity; and
 Cash flows.

 The standard observes that this information, along with other information in in the notes,
would assist users of financial statements in predicting the entity’s future cash flows and,
in particular, their timing and certainty.

COMPONENTS OF FINANCIAL
STATEMENTS
 According to IAS 1. 10, a complete set of financial
statements comprises:
 A statement of financial position as at the end of the
period;
 A statement of profit or loss and other comprehensive
income for the period;
 A statement of changes in equity for the period;
 A statement of cash flows for the period; and
 Notes, comprising a summary of significant
accounting policies and other explanatory notes.
STRUCTURE AND CONTENTS OF
FINANCIAL STATEMENTS
 IAS 1.47 requires particular disclosures on the face
of the statements of financial position, statements of
profit or loss and other comprehensive income and
statement of changes in equity and requires
disclosure of other line items either on the face of
those statements or in the notes. With regard to the
statement of cash flows, requirements regarding
disclosure in this statement are set out in IAS 7,
which deals with the statement of cash flow
 STRUCTURE AND CONTENTS OF
FINANCIAL STATEMENTS
Identification of financial statements
 IAS 1.51 to .53 require that each component of the financial
statements shall be identified clearly so that the users can easily
distinguish them from other information complied in financial
reports. In addition, the following information shall be displayed
prominently and repeated when it is necessary for a proper
understanding of the information presented:
 The name of the reporting entity;
 The date at the end of the reporting period or the period covered by the
set of financial statements or notes;
 The presentation currency;
 The level of rounding used in presenting amounts in the financial
statements.
STRUCTURE AND CONTENTS OF
FINANCIAL STATEMENTS
Statement of financial position (information about the financial
position of the entity):
 The economic resources available to generate future cash flows;
 The financial structure with emphasis on own and borrowed
capital and may be used to predict future borrowing needs;
 The liquidity position and may be used to predict the
availability of cash after settling financial commitments for the
same period; and
 The solvency position and may be used to predict the
availability of cash over longer periods to meet financial
commitments as they fall due.
 STRUCTURE AND CONTENTS OF
FINANCIAL STATEMENTS
Statement of financial position
 As a minimum, the statement of financial position shall include line items that present the
following amounts: IAS 1.54:
 Property, plant and equipment
 Investment property
 Intangible assets
 Financial assets (for example an equity instrument of another entity held for investment purposes or a
cash investment)
 Inventories
 Trade and other receivables
 Cash and cash equivalents
 Trade and other payables
 Financial liabilities
 Issued capital and reserves
 IAS 1.55 to 57 further states that an entity shall present additional line items, headings and
subtotals in the statement of financial position when such presentation is relevant to an
understanding of the entity’s financial position. These line items are included when the size,
nature or function of an item or aggregation of similar items such that separate presentation is
relevant to an understanding of the entity’s financial position.
STRUCTURE AND CONTENTS OF
FINANCIAL STATEMENTS
 An entity shall present current and non-current
assets, and current and non-current liabilities as
separate classification in the statement of financial
position (IAS 1.60)
STRUCTURE AND CONTENTS OF
FINANCIAL STATEMENTS
Information to be presented either in the statement of
financial position or in the notes
 According to IAS 1.77, an entity shall disclose, either in the
statement of financial position or in the notes, further sub
classifications of the line items presented, classified in a
manner appropriate to the entity’s operations. For example,
items of property, plant and equipment are disaggregated into
appropriate classes, while receivables are disaggregated into
amounts such as accrued income (IAS 1.78)
 While IAS 1.79(a) deals with how the share capital and
reserves of a company shall be disclosed, which falls outside t
STRUCTURE AND CONTENTS OF
FINANCIAL STATEMENTS
 Statement of profit or loss and other
comprehensive income (information about the
financial performance of the entity):
 Allows assessment of potential changes in
economic resources in the future;
 Permits assessment of potential effective use of
additional resources; and
 Is useful in predicting the capacity of the entity to
generate cash flows from existing resources.
STRUCTURE AND CONTENTS OF
FINANCIAL STATEMENTS
Statement of profit or loss and other comprehensive
income
 According to IAS 1.81 an entity shall present all items
of income and expenses recognised in a period:
 In a single statement of profit or loss and other
comprehensive income; or
 In two 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 income (statement of
comprehensive income).
 STRUCTURE AND CONTENTS OF
FINANCIAL STATEMENTS
Information to be presented in the statement of profit or loss and other
comprehensive income

As a minimum, the statement of profit or loss and other comprehensive income

shall include line items that present the following amounts for the period (IAS
1.82):
 Revenue
 Operating expenses
 Finance costs
 Tax expense
 Profit or loss
 Each component of other comprehensive income classified by nature; and
 Total comprehensive income
Additional line items, headings and subtotals shall be presented in the statement of
profit or loss and other comprehensive income when such presentation is relevant
to an understanding of the entity’s financial performance (IAS 1.85).
 STRUCTURE AND CONTENTS OF
FINANCIAL STATEMENTS
Information to be presented either in the statement of profit or loss and other
comprehensive income on in the notes

 According to IAS 1.97 to .98, when item of income and expenses are material,
their nature and amount shall be disclosed separately, for example:
 The write downs of inventories to the net realisable value and reversal of such
write-downs;
 The disposal of items of property, plant and equipment; and
 The disposal of investments.

 IAS 1.99 further states that an entity shall present an analysis of expenses using
a classification based on either the nature of the expense or its function within
the entity, classification based on either the nature of the expense or its function
within the entity, whichever provides information that is reliable and more
relevant
 STRUCTURE AND CONTENTS OF
FINANCIAL STATEMENTS
ABC LTD
Statement of profit or loss and other comprehensive income for the year ended 31 December 2015
Notes N$
2015 2014
Revenue 2 xxxxxxx xxxxxxxx
Cost of sales (xxxxxx) (xxxxxxx)
Gross profit xxxxxxx xxxxxxxx
Other income 3 xxxxxxx xxxxxxxx
Distribution costs 4 (xxxxxx) (xxxxxxx)
Administration expenses 5 (xxxxxx) (xxxxxxx)
Other expenses (xxxxxx) (xxxxxxx)
Profit before tax xxxxxxx xxxxxxxx
Income tax (xxxxxxx) (xxxxxxx)
Profit for the year xxxxxxxx xxxxxxxx
Other comprehensive income for the year xxxxxxxx xxxxxxxx
Fair judgement xxxxxxxx xxxxxxx
Total comprehensive income for the year xxxxxxxx xxxxxxx
 STRUCTURE AND CONTENTS OF
FINANCIAL STATEMENTS
Statement of changes in equity (information about changes in
the capital structure of an entity):
 Allows assessment of changes in equity and transactions
affecting equity.
 STRUCTURE AND CONTENTS OF
FINANCIAL STATEMENTS
Statement of changes in equity
(a) Information to be presented in the statement of changes in equity
 According to IAS 1.106, an entity shall present a statement of changes in
equity showing in the statement:
 Total comprehensive income for the period
 The amounts of transactions with owners acting in their capacity as owners,
showing contributions by and distribution to owners separately; and
 For each component of equity, a reconciliation between the carrying amount
at the beginning and the end of the period, separately disclosing each change.
(b) Information to be presented in the statement of changes in equity or in
the notes (IAS 1.107)
 The amount of dividends recognised as distribution to owners during the
period, and the related amounts per share.
 STRUCTURE AND CONTENTS OF
FINANCIAL STATEMENTS

Statement of cash flows (information about changes in the

financial position of entity):
 Allows assessment of the operating investing and financing
activities of an entity and its ability to generate cash and
cash equivalents in order to meet its cash flow need.
 STRUCTURE AND CONTENTS OF
FINANCIAL STATEMENTS
Statement of cash flows
 According to IAS 1.111, cash flow information provides
users of financial statements with a basis to assess the
ability of the entity to generate cash and cash equivalents
and the needs of the entity to utilise those cash flows.
 IAS 7 Statements of cash flows sets outs the requirements
for the presentation of Statement of Cash Flows and
related disclosures. Statement of cash flows are discussed
in the next unit.
 STRUCTURE AND CONTENTS OF
FINANCIAL STATEMENTS
Notes to the financial statement:
 Contain additional information that is relevant to the needs of
the users about the items in the balance sheet (statement of
financial position), income statement (statement of profit or
loss and other comprehensive income), statement of
changes in equity and cash flow statement (statement of cash
flows).
 STRUCTURE AND CONTENTS OF
FINANCIAL STATEMENTS
Notes
 Notes contain information in addition to that presented in
the statement of financial position, statement of profit or
loss and other comprehensive income, statement changes
in equity and statement of cash flows.
 Notes provides descriptions or disaggregation of items
disclosed in those statements and information about items
that do not qualify for recognition in those statements
(IAS 1.7).
 STRUCTURE AND CONTENTS OF
FINANCIAL STATEMENTS
Structure
IAS 1.112 states that the notes shall:
 Present information about the basis of preparation of the statements and
the specific accounting policies used;
 Disclose the information required by the IFRSs that is not presented
elsewhere in the financial statements; and
 Provide additional information that is not presented elsewhere in the
financial statements, but is relevant to understanding any of them.
 Notes must, as far as practicable, be presented in a systematic manner.
Each item in the statements of financial position and of comprehensive
income, in the separate income statement (if presented), and in the
statements of changes in equity and of cash flows shall be cross-referenced
to any related information in the notes (IAS 1.113).
 STRUCTURE AND CONTENT OF
FINANCIAL STATEMENTS
According to IAS 1.114, notes are normally presented in the
following order, which assists the users in understanding the
financial statements and comparing them to financial statements of
other entities:
 A statement of compliance with the IFRSs;
 A summary of the significant accounting policies applied;
 The supporting information for items presented in the
statements of financial position and of comprehensive income,
in the separate income statement (if presented), and in the
statements of changes in equity and cash flows, in the order
which each statement or line is presented; and
 Other disclosures.