FINANCIAL ACCOUNTING AND REPORTING (FAR)

LECTURE
STATEMENT OF COMPREHENSIVE INCOME
Other Comprehensive Income (PAS 1) and Accounting Changes (PAS 8)

FUNCTIONAL PRESENTATION
Net sale xx
Cost of goods sold (xx)
Gross Profit xx
Investment income xx
Other income xx
Total income xx
Selling expense (xx)
Administrative expense (xx)
Finance cost (xx)
Other expense (xx)
Income before tax xx
Income tax expense (xx)
Income from continuing operations xx Income from discontinued operations
Income from discontinued operations xx is already presented net of tax
Net income/Profit of loss xx
Other comprehensive income
May be reclassified to profit or loss xx
May not be reclassified to profit or loss xx
Total comprehensive income xx

NATURAL PRESENTATION
Net sales xx
Other income xx
Investment income xx
Total income xx
Purchase of inventory (xx)
Increase in inventory xx Cost of goods sold
Decrease in inventory (xx)
Depreciation (xx)
Doubtful accounts (xx)
Salaries expense (xx)
Finance cost (xx)
Income before tax xx
Income tax expense (xx)
Income from continuing operations xx
Income from discontinued operations xx
Net income xx
Other comprehensive income
May be reclassified to profit or loss xx
May not be reclassified to profit or loss xx
Total comprehensive income xx
OCI that may be recycled to Profit of Loss (DFC)
a. Change in fair value of a debt investment measured at FVOCI
b. Gain or loss on translating the financial statements of a foreign corporation
c. Unrealized gain or loss of derivative contracts designated as cash flow hedge

OCI that may be recycled to Retained Earnings (CRED)

a. Change in fair value of an equity investment measured at FVOCI
b. Net remeasurement gain or loss on defined benefit plans
c. Gain or loss on credit risk of a financial liability designated at FVPL (fair value option)
d. Revaluation surplus during the year

ACCOUNTING CHANGES
A. ACCOUNTING POLICY
- Principles, bases, conventions, rules and practices applied in preparing and presenting
the financial statements
- Change in accounting policy
o Required by PFRS
o If there is no requirement by PFRS, the change will result more relevant and
faithfully represented (voluntary change)
- Reporting change in accounting policy
o Transitional provisions
o If no transitional provisions, apply retrospectively
o If retrospectively, restate FS of prior periods

B. ACCOUNTING ESTIMATE
a. Change in accounting estimate
▪ Normal recurring correction or adjustment to an asset or liability
▪ New information of new development
b. Reporting change in accounting estimate
▪ Currently and prospectively by including in profit or loss
• Period of change only
• Period of change and future periods