PRESENTATION OF FINANCIAL STATEMENTS

OBJECTIVES COMMONLY PREPARED REPORTS

- reports and statements in addition to the
To prescribe the basis for presentation F.S. outside the scope of PFRS's
of general purpose F.S.
To ensure comparability of entity's Environmental Report
previous F.S. and other entities' Value Added Statement
To set out overall requirements for Financial Review
presentation, guidelines for structure,
and minimum content requirements
FINANCIAL STATEMENT
SCOPE OF OBJECTIVE
APPLICABILITY
to FAIRLY PRESENT important
PAS 1...
information about an entity that is
covers preparing and presenting
useful to a wide range of users in
G.P.F.S. following P.F.R.S
making economic decisions.
excludes structure and content of
condensed interim F.S. prepared
Financial Position
with P.A.S. 34
covers all entities equally Financial Performance
Cash Flows

PHILIPPINE FINANCIAL FINANCIAL STATEMENTS also show the result

REPORTING STANDARDS of the management's stewardship of its
resources

COMPONENTS
1. Philippine Financial Reporting Standards FAIR PRESENTATION
2. Philippine Accounting Standards (PAS) select and apply PAS 8 policies
3. IFRIC Interpretations present reliable, relevant, comparable,
4. SIC Interpretations and understandable information
provide additional disclosures in
COMPLETE FINANCIAL compliance to specific requirements
STATEMENT SET

Preceding Period ACHIEVING THE

Comparative Information OBJECTIVES
For-the-Period
Financial Statements must provide
Statement of Profit or Loss
information about the entity's:
Statement of Changes in Equity
assets and liabilities
Statement of Cash Flows
equity
End-of-Period income and expenses
Statement of Financial Position gains and losses
Others owner contributions and
Notes (accounting policies, distributions
other explanatory infomation) cash flows
 PRESENTATION OF FINANCIAL STATEMENTS
Entities cannot rectify inappropriate
accounting policies by disclosure or
explanatory material.
In the case that the management
concludes that compliance with PFRS
requirements would be misleading leading
to a conflict with F.S.'s objectives:
Case 1. relevant framework does not (or
does) require a departure
the entity shall depart from that
requirement and disclose:
1. That the management has concluded
that the F.S.'s present fairly the entity's
fairly presented important information
2. That it has complied with the
applicable PFRS's
3. PFRS title from which the entity
departed
4. The entity's nature of departure and the
treatment the PFRS would require
5. The reason the treatment would be
misleading that it would conflict with
the F.S.'s objectives set in the
framework
6. The adopted treatment
7. The financial effect of the departure on
each item in the F.S. for each period
presented
Case 2. relevant regulatory framework
prohibits departure from requirement
the entity shall, as much as possible,
reduce perceived misleading aspects
of compliance by disclosing:
1. The PFRS title in question
2. The nature of the requirement
3. The reason the management has
concluded that complying with the
requirement is misleading that it
would conflict with the F.S.'s
objectives set in the framework
4. Adjustments to each item in the F.S.
necessary to achieve fair presentation
for each period presented
GENERAL FEATURES
FAIR PRESENTATION
Entities shall present with equal
prominence all F.S. in a complete set
An item is in conflict with the F.S.
objectives when it does not fully
present faithfully transactions it
purports to represent
Omissions and misstatements are
material if they influence economic
decisions
GOING CONCERN
The F.S. must be prepared on a going
concern basis and use the accrual
basis of accounting, except on
Statement of Cash Flows
Entities must disclose: material
uncertainties, the F.S. preparation
basis, and why, if they choose, it is not
a going concern
To liquidate is not going concern
MATERIALITY AND AGGREGATION
Transactions are aggregated into
classes following nature and function
final stage: presentation of condensed
and classified data
Items of dissimilar function must be
presented separately unless
immaterial
A line-item not individually material
must be aggregated with other items
in those statements
Material information must not be
obscured by means of aggregating
material items with different nature
OFFSETTING
Generally, an entity must not offset
assets and liabilities or income and
expenses (subject to exceptions)
Offsetting may be done when:
required or expressed by permit by
a PFRS
when it reflects the substance of
the transaction and detracts from
users' ability to understand them
and assess the entity's cash flows
 PRESENTATION OF FINANCIAL STATEMENTS

GENERAL FEATURES
cont... STRUCTURE AND
CONTENT
FREQUENCY OF REPORTING COMMON REQUIREMENTS
An entity shall present a complete F.S. 1. Reporting entity's name
set at least annually including 2. Whether the F.S.'s are of an individual
comparative information entity or a group
The entity must disclose: 3. Reporting period covered or its end date
period covered by F.S. 4. Presentation currency (PAS 21)
reason for using a shorter or longer 5. Rounding level used in presenting
period amounts
that the amounts presented in the
F.S. are not entirely comparable
STATEMENT OF FINANCIAL POSITION
COMPARATIVE INFORMATION the following line items must be included:

An entity must present comparative property, plant, trade, and other

information in respect of all the and equipment payables and
preceding periods for all amounts investment receivables
reported in the current period's F.S. property provisions
As a minimum, two of the following intangible assets financial liabilities
must be presented: financial assets Income Taxes (PAS
Financial Position Statement biological (PAS 12)
Profit-Loss Statement 41) assets deferred tax
Other Comprehensive Income total held-for-sale liabilities and
A third Financial Position Statement at and disposal assets (PAS 12)
the beginning of the preceding period grouped (PFRS 5) held-for-sale and
must be presented if it: assets disposal grouped
applies an accounting policy groups of liabilities (PFRS 5)
retrospectively contracts within non-controlling
makes a retrospective items PFRS 17 interests,
restatement in its F.S. investments presented within
reclassifies items in its F.S. considered with equity
[the retrospective application and equity method issued capital and
restatement has a material effect inventories reserves
on the Financial Position cash and cash attributable to
Statement's information equivalents parent owners
Unless impractical, reclassification of
comparative amounts is necessary if an An entity shall present additional
entity changes the classification of items, headings, and subtotals
items in the F.S. when relevant
There is no order of format
CONSISTENCY OF PRESENTATION prescribed in which an entity
presents items
An entity may not retain the item An entity shall present, as
classification in the F.S. from one separate classifications in the
period to the next when: Statement of Financial Position,
it is apparent that another the following:
classification would be more Current Assets
appropriate following the criteria Non-Current Assets
in PAS 8 Current Liabilities
a PFRS requires a change in Non-Current Liabilities
presentation
 PRESENTATION OF FINANCIAL STATEMENTS

OTHER COMPREHENSIVE
ASSET CURRENT LIABILITY INCOME
CURRENT ze asset holds liability primarily
reali
expects to d for trading
p e ra ting perio COMMON PRESENTATION
in the o m a ri ly no unconditional right
holds asse
t pri
to defer settlement of
REQUIREMENTS
d in g
for tr a 12 liability for at least 12
ets within the following components must be included:
realize ass o rt in g months after reporting
fter rep
months a period 1. changes in revaluation surplus
period expects to settle
ash 2. remeasurements of defined benefit plans
a cash or c liability in normal
iv a le n t unless 3. translation gains and losses arising from
equ operating cycle
restricted liability due within 12 translating the F.S. of a foreign operation
months after reporting 4. unrealized gains and losses on/from:
period a. investments in equity instruments
designated at fair value
OPERATING CYCLE b. financial assets measured at fair value
5. effective portion of gains and losses on
time between acquisition of
hedging instruments in a cash flow hedge
assets for processing and
6. gains and losses on hedging instruments that
their realization in cash
hedge investments in equity instruments
if not clearly identifiable,
assume 12 months measured at fair value
7. for particular liabilities at fair value, the
amount of change in fair value attributable to
changes in the liability's credit risk
STATEMENT OF PROFIT OR LOSS 8. changes in the value of time value of options
AND COMPREHENSIVE INCOME 9. changes in the value of the forward elements
of forward contracts when separating its
forward and spot elements and designating as
STATEMENT OF the hedging instrument
COMPREHENSIVE INCOME 10. insurance finance income and expenses from
here enlists the entity's financial contracts issued (PFRS 17) excluded from
performance and management profit or loss
stewardship through income and 11. finance income and expenses from
expenses reinsurance contracts held exclusive from
may be presented in two approaches: profit or loss
One-Statement
Two-Statement In addition to the statement of profit
or loss and other comprehensive
TOTAL COMPREHENSIVE INCOME income [sections], it shall present:

the change in equity during a period

i. profit or loss
resulting from a transaction and other
events
ii. total other comprehensive
comprises: income
i. "Profit or Loss" iii. comprehensive income
total income less expenses for the period, being the
ii. "Other Comprehensive Income" total of profit or loss and
items of income and expense other comprehensive
not recognized in "profit or income
loss"
 PRESENTATION OF FINANCIAL STATEMENTS
cont...
STATEMENT OF PROFIT OR LOSS
AND COMPREHENSIVE INCOME
CONSOLIDATED FINANCIAL STATMENTS
In addition to the statement of profit or
loss and O.C.I. [sections], it shall present for
the period they are attributable to:
non-controlling interests
owners of the parent
PROFIT OR LOSS SECTION
In addition to the items required by other
PFRS's, it shall present the following line
items for the period:
interest revenue using the effective
interest method
insurance revenue (PFRS 17)
gains and losses arising from
financial asset derecognition
insurance service expenses from
contracts issued (PFRS 17)
income or expenses from
reinsurance contracts held (PFRS 17)
finance costs
impairment losses (PFRS 9)
insurance finance income or
expenses from contracts issued
(PFRS 17)
finance income or expenses held
from reinsurance contracts held
share of joint ventures and
associates' profit or loss accounted
for through equity method
If a financial asset is reclassified out
of amortized cost measurement
category: any gain or loss arising
from a difference between previous
amortized cost of financial asset and
its fair value at reclassification date
If a financial asset is reclassified out
of fair value: any cumulative gain or
loss previously recognized in O.C.I
reclassified to profit or loss
tax expense
single amount for the total of
discontinued operations (PFRS 5)
OTHER COMPREHENSIVE INCOME
STATEMENT
The section shall present the following line
items for the amounts for the period, such
that they:
will not be reclassified subsequently
to profit or loss
will be reclassified subsequently to
profit or loss when specific
conditions are met
1. items of O.C.I. classified by nature and
grouped into those that, following with
other PFRS:
2. the share of joint ventures and
associates' O.C.I. accounted for through
equity method, separated into the share
of items that, following PFRS:
An entity shall present an analysis of
expenses recognized in profit or loss
based on nature or function:
"nature of expense" method
"function of expense" method
"cost of sale"
This analysis is provided in one or two
forms: natural and functional
NATURAL FORM
an entity aggregates expenses within
profit or loss following their nature
without reallocating them among
functions within the entity. This method
is simple to apply since no allocations of
expenses to functional classifications
are necessary
FUNCTIONAL FORM
the 'function of the expense' method
that classifies expenses following their
function as part of the cost of sales. At a
minimum, an entity discloses its cost of
sales under this method separately
from other expenses and can provide
more relevant information to users than
the expense classification by nature.
 PRESENTATION OF FINANCIAL STATEMENTS
RECLASSIFICATION ADJUSTMENTS
amounts reclassified to profit or loss in
the current period that were recognized
in O.C.I. in the current or previous period
the transferring or reclassifying of O.C.I.
items into profit or loss
presented in the statement of profit or
loss and O.C.I. or in the notes
A reclassification adjustment is
included with the related
component of O.C.I. in the period
that the adjustment is reclassified to
profit or loss.
an entity may present items of O.C.I either:
1. net of related tax effect; or
2. before related tax effects with one
amount shown for the aggregate amount
of income tax relating to those items
STATEMENT OF CHANGES IN
EQUITY
the change in equity by an entity
represents the increase or decrease in
its net assets during the period
the statement must include the following:
1. total C.I. for the period, showing the total
amounts attributable to parent owners
and non-controlling interests separately
2. for each component of equity, the effects
of retrospective application or
restatement (PAS 8)
3. for each component of equity, a
reconciliation between the carrying
amount at the beginning and the end of
the period, separately disclosing:
a. profit or loss
b. other comprehensive income
c. transactions with owners in their
capacity as owners showing their
contributions
d. changes in ownership interests
STATEMENT OF CASH FLOWS
provides a basis to assess the ability
of the entity to generate cash and
cash equivalents and the needs of the
entity to utilize those cash flows
NOTES TO THE FINANCIAL
STATEMENT
the statement includes the following:
additional information from other F.S.
narrative description or
disaggregation of items and items
that do not qualify for recognition in
those statements
information about the basis of
preparation of F.S.
specific accounting policies used
information required by PFRS not
presented elsewhere in the F.S.
any other information not presented
elsewhere but is relevant to an
understanding of any of them
It is important to disclose the basis of
measurement in the notes or in their
respective F.S.
these should be presented systematically
with each item cross-referenced
examples of systematic ordering of notes:
1. giving prominence to the areas of its
activities that the entity considers to be
most relevant to an understanding of its
financial performance and position
2. grouping together information about
items measured similarly
3. following the order of the line items in the
statement of profit or loss and O.C.I.
4. in the statement of cash flows and
changes in equity, the order in which each
line item is presented includes:
a. contingent liabilities and
unrecognized commitments
b. non-financial disclosures
 PRESENTATION OF FINANCIAL STATEMENTS
OTHER DISCLOSURES REQUIRED
circumstances that prompt the separate
disclosure of items of income and expenses:
write-downs of inventories to net
realizable value or of property, plant, and
equipment (PPE) to recoverable amount,
and reversals of such
restructuring of activities and reversals of
any provisions for the cost of it
disposal of property, plant, and
equipment (PPE)
disposal of investments
discontinued operations
litigation settlements
other reversals of provisions
When items of income or expense are
material, an entity shall disclose their
nature and amount separately
information to be presented in either
statement of financial position or notes:
further sub-classifications of line items
presented depending on PFRS
requirements and size, nature, and
function of entity's assets
Example:
items of property, plant and
equipment are disaggregated into
classes following PAS 16
receivables are disaggregated into
amounts receivable from trade
customers, receivables from related
parties, pre-payments, and other
amounts
information to be presented in either
statement of changes in equity or notes:
analysis of O.C.I. by item for each
component of equity
amount of dividends recognized as
distributions to owners during the period,
and the related amount of dividends er
share
information to be presented in either
statement of financial position,
changes in equity or notes:
for each class of share capital
number of shares authorized
number of shares issued and fully paid,
and issued but not fully paid
per value per share, or that the shares
have no par value
a reconciliation of the number of
shares outstanding at the beginning
and the end of the period
the rights, preferences, ad restrictions
attaching to that class including
restrictions on the distribution of
dividends and the repayment of
capital
shares in the entity held by them or by
its subsidiaries or associates
shares reserved for issue under options
and contracts for the sale of shares,
including terms and amounts
a description of the nature and purpose or
each reserve within equity
information to be disclosed when an
entity reclassifies certain kind of
financial instruments:
For puttable financial instruments classified
as equity instruments:
summary quantitative data about the
amount classified as equity
objectives, policies, and processes for
managing its obligation to repurchase
the instruments when required
expected cash outflow or redemption
of that class of financial instruments
information about how the expected
cash outflow on redemption was
determined
An entity without share capital shall
disclose equivalent information to those
provided in number 77 herein, showing:
changes during period
the rights
preferences and restrictions
 PRESENTATION OF FINANCIAL STATEMENTS

cont...
OTHER DISCLOSURES REQUIRED

other requirements entities must disclose:

an entity whose financial statements comply with PFRS shall make an explicit and unreserved
statement of such compliance.
the entity's judgments management has made in applying accounting policies with a significant
effect on amounts
assumptions the entity makes about the future and other major sources of estimation
information that enables users of its F.S. to evaluate entity's objectives, policies, and processes
for managing capital
amount of dividends declared but not recognized as a distribution to owners, related amount per
share, amount of any cumulative preference dividends not recognized
if not disclosed elsewhere:
domicile and legal form
country of incorporation and address of the registered office
description of the nature of the entity's operations and its principal activities
name of parent and the ultimate parent of the group
if it is a limited life entity, information regarding length of its life

for cases when it is impractical to disclose the

When an entity presents current and non- extent of possible effects of an assumption or
current assets and liabilities, as separate another source of estimation uncertainty at
the end of the reporting period:
classifications in its statement of financial
position:
the entity shall disclose that is reasonably
it shall not classify or present: possible, on current knowledge, that
deferred tax assets as outcomes within the next financial year
current assets that are different from the assumption
any items of income or could require a material adjustment to
expense as extraordinary the carrying amount of the asset or
items
liability affected

MR. ME end