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PRESENTATION OF FINANCIAL STATEMENT © 2013 The McGraw-Hill Companies, Inc.
PRESENTATION OF FINANCIAL STATEMENT
PRESENTATION OF
FINANCIAL STATEMENT

© 2013 The McGraw-Hill Companies, Inc.

Outline
Outline

PRESENTATION OF FINANCIAL STATEMENT Annual report

Components of Financial Statements

Statement of financial position

Statement of comprehensive income

Statement of changes in equity

Statement of cash flows

Notes to the financial statements

Interim report

o

Objective of interim financial reporting

o

Components of an interim report

A Complete Set of Financial Statements

Financial Statements
Financial Statements
A Complete Set of Financial Statements Financial Statements Statements of Comprehensive Income Statement of Changes in
A Complete Set of Financial Statements Financial Statements Statements of Comprehensive Income Statement of Changes in
A Complete Set of Financial Statements Financial Statements Statements of Comprehensive Income Statement of Changes in
A Complete Set of Financial Statements Financial Statements Statements of Comprehensive Income Statement of Changes in
A Complete Set of Financial Statements Financial Statements Statements of Comprehensive Income Statement of Changes in
A Complete Set of Financial Statements Financial Statements Statements of Comprehensive Income Statement of Changes in
A Complete Set of Financial Statements Financial Statements Statements of Comprehensive Income Statement of Changes in
A Complete Set of Financial Statements Financial Statements Statements of Comprehensive Income Statement of Changes in
Statements of Comprehensive Income
Statements of
Comprehensive
Income
Statement of Changes in Equity
Statement of
Changes in
Equity
Statement of Cash Flows
Statement of
Cash Flows
Statement of Financial Position
Statement of
Financial
Position
Notes to the Financial Statements
Notes to the
Financial
Statements

Statement of Financial Position

Purpose: enables users to assess the financial health of an entity by looking at the state of its assets and compare

them with its liabilities

Minimum information: MFRS 101.54

STATEMENT OF FINANCIAL POSITION
STATEMENT OF FINANCIAL POSITION

(continued)

STATEMENT OF FINANCIAL POSITION
STATEMENT OF FINANCIAL POSITION

(continued)

3-6

STATEMENT OF FINANCIAL POSITION
STATEMENT OF FINANCIAL POSITION

(concluded)

3-7

Statement of Comprehensive Income

The sections in the statement:

(a) profit or loss;

(b) total other comprehensive income; and

(c) comprehensive income for the period (the total of profit

or loss and other comprehensive income) [MFRS101.81A].

Purpose: to provide users with the basis for measuring

performance

accounting period.

of

an

entity’s

performance

over

a

financial

Statement of Profit or Loss

Required line items:

(a) revenue;

(b)

finance costs;

(c)

share of the profit or loss of associates and joint ventures accounted for using the equity method;

(d)

tax expense; (and)

(e)

a single amount for the total of discontinued operations

[MFRS101.82].

Other Comprehensive Income Section

Any excess from changes in value in its assets and/or liabilities.

Includes [MFRS101.7]:

(a) changes in revaluation surplus; (b) actuarial gains and losses on defined benefit plans;

(c)

gains

and

losses

arising

from

translating

the

financial

statements of a foreign operation;

(d) gains and losses on remeasuring available-for-sale financial assets;

(e)

the

effective

portion

of

gains

and

losses

hedging

on

instruments in a cash flow hedge.

STATEMENT OF COMPREHENSIVE INCOME (continued) 4-11
STATEMENT OF COMPREHENSIVE INCOME
STATEMENT OF COMPREHENSIVE INCOME

(continued)

4-11

STATEMENT OF COMPREHENSIVE INCOME
STATEMENT OF COMPREHENSIVE INCOME

Statement of Changes in Equity

It shows the factors that cause a change in the owner’s equity

over one accounting period.

The changes in the equity between the opening balance and closing balance within an accounting period, reflect the increase or decrease in the entity’s net assets.

The overall change represents the total amount of income and expense, including gains and losses, generated by the activities in the entity.

The changes resulting from transactions with owners in their capacity as owners cannot be identified by the change from opening balance to closing balance, which thus necessitates the statement of changes in equity.

Statement of Changes in Equity

Minimum information required:

(a) total comprehensive income for the period;

(b) the effects of retrospective application or retrospective restatement; and (c) a reconciliation between the carrying amount at the beginning and

the end of the period, separately disclosing changes resulting from:

(i) profit or loss; (ii) other comprehensive income; and (iii) transactions with owners in their capacity as owners showing separately contributions by and distributions to owners, and changes in ownership interests in subsidiaries that do not result in a loss of control [MFRS101.106]

STATEMENT OF CHANGES IN EQUITY
STATEMENT OF CHANGES IN EQUITY

(continued)

5-15

STATEMENT OF CHANGES IN EQUITY

STATEMENT OF CHANGES IN EQUITY 5-16

Statement of Cash Flows

Purpose:

provides the basis for users to assess the ability of an entity to generate cash and cash equivalents and the needs of the entity to utilize them. provides information about the historical changes in cash and cash equivalents of the entity that classifies cash flow during the period as from operating, investing and financing activities. gives ideas to users about the entity’s liquidity and solvency.

Statement of Cash Flows

Reporting cash flows from operating activities

To present information on cash flows either by using:

(a) the direct method, whereby major classes of gross cash receipts and gross cash payments are disclosed; or (b) the indirect method, whereby profit or loss is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments, and items of income or expense associated with investing or financing cash flows.

STATEMENT OF CASH FLOW
STATEMENT OF CASH FLOW
STATEMENT OF CASH FLOW 5-19 5-19

5-19

Notes to the Financial Statements

Notes to the Financial Statements

Interim Reports

Statements showing financial position and operating

results for intervals of less than a year are referred

to as interim financial statements.

Under the integral part of annual period concept, the same general accounting principles and reporting practices employed for annual reports are to be utilized for interim statements,

but modifications may be required so the interim results will better relate to the total results of

operations for the annual period.

(continued)

Interim Reporting

Issued for periods of less than a year, typically as quarterly financial statements.

Serves to enhance the timeliness of financial information.

Fundamental debate centers on the choice between the discrete and integral part approaches.

Interim Reporting

Reporting Revenues

and Expenses

Interim Reporting Reporting Revenues and Expenses IAS No. 14 requires companies to apply the same accounting

IAS No. 14 requires companies to apply the same accounting policies

in its interim financial statements as

its annual financial statements

Reporting Unusual Items

Major events such as discontinued

operations are reported entirely

within the interim period in which they occur.

entirely within the interim period in which they occur. Earnings Per Share Quarterly EPS calculations follow

Earnings Per Share

Quarterly EPS calculations follow

the same procedures as annual calculations.

follow the same procedures as annual calculations. Reporting Accounting Changes Accounting changes made in an

Reporting Accounting Changes

Accounting changes made in an

interim period are reported by retrospectively applying the changes

to prior financial statements.

made in an interim period are reported by retrospectively applying the changes to prior financial statements.

Interim Reporting

Disclosures

Recognition and reversal of impairment loss and write-downs.

Purchase and disposal of property, plant, and equipment.

Litigation settlements.

Changes in accounting policies, accounting estimates, and

correction of errors.

Related party transactions.

Changes in the classification of financial assets.

Changes in contingent liabilities or contingent assets.

Seasonal revenues, costs, and expenses.

Issuance of debt and equity securities.

Dividends paid.

Changes in corporate structure such as business

combinations, gain or loss of control of investments,

restructurings, and discontinued operations.

Unusual or infrequent items.

Summary

For presentation of financial statements, we should refer to MFRS 101 Presentation of Financial Statements

and MFRS 107 Statement of Cash Flows as well as other standards for specific items that require special

disclosures.

A complete set of financial statements consist of Statement of Financial Position, Statement of Profit or Loss and Other Comprehensive Income, Statement of Changes in Equity, Statement of Cash Flows and notes to the accounts.

Summary

When preparing financial statements, we should always remember to serve the specific objective of

these statements, that is to provide information about

financial position, financial performance and cash

flows of the entity that is useful to a wide range of

users in making economic decisions. There are items that must be presented on the face of these statements and items that are allowed to be presented either in these statements, another statement or in notes.

END OF LECTURE