Updates in Financial Accounting and Reporting - Shows the entity’s financial condition as at a certain date

- Classified presentation: current vs noncurrent (required)

[*] Disclosure Requirements
- Unclassified presentation: based on liquidity only
FINANCIAL STATEMENTS
Working capital = Current Assets – Current Liabilities
- End product of financial reporting
Operating Cycle – time between acquisition of assets for
- Structured representation of and entity’s financial position
processing and realization in cash/cash equivalents; assumed
and results of its operation
to be 12 months, if not identified
- General Purpose FS: for users not in the position to
require an entity to prepare reports tailored to particular Classifications of Items
operation needs
Current Noncurrent
- Responsibility of management expressly stated in
ASSETS
Statement of Management’s Responsibility for Financial Debit balance on accounts Deferred tax assets/liabilities,
StaTements payable/ Advances to suppliers regardless of expected date of
i. Preparation reversal
ii. Internal control over financial reporting Long-term liabilities payable Long-term liabilities payable
iii. Going concern assessment on demand + grace period after on demand with grace period
end of reporting period before or at the end of reporting
iv. Oversight of the financial reporting process period
v. Review and approval of financial statements Held for trading securities FA – FVOCI, silent
- Complete set (6) FA – FVPL
1. Statement of financial position – balance sheet Sinking fund related to current Sinking fund, silent
2. Statement of profit or loss and other comprehensive liability
Prepaid assets Investment in associate
income – different from income statement
Advances to subsidiary
3. Statement of changes in equity Investment Property
4. Statement of cash flows PPE
5. Notes; Goodwill
a. Comparative information Security deposit
6. Additional/ Third statement of financial position if: Deferred charges (prepaid
a. Entity applies accounting policy assets but long-term)
retrospectively LIABILITIES
b. (a) has material effect in SOFP at the Credit balance on accounts
beginning of the preceding period receivable / Advances from
customers
*dated as at beginning of preceding period Bank overdrafts
*no need to present notes Maturing portion of loans/notes
*Reports outside FS are outside scope of PFRS. Interest payable
Cash dividends payable
Income taxes payable
Features of FS

1. Fair presentation and compliance with PFRS [1] Refinancing agreement – long-term obligation maturing
a. Departure from a PFRS requirement – within 12 months after reporting period is
allowed if compliance is misleading [2] rescheduled/replaced with new debt with different terms
2. Prepared on a going concern basis [3,4]
Refinancing Agreement Classification
3. Prepared on an accrual basis, except cash flows (cash
During End Authorize
basis) d for issue
4. Each MATERIAL class of similar items are presented Current
separately in a line item. Immaterial items are aggregated Noncurrent
with others. Entity has discretion to refinance Noncurrent
5. Offsetting is NOT allowed unless required/permitted by Entity does not have discretion Current
PFRS – measuring assets net of valuation allowances is
not offsetting Other unusual items
6. Prepared at least annually [5]
Share dividends payable contra-equity
Contingent liability Disclosed in notes if
reasonably possible
Equity in assigned Disclosed in notes
STATEMENT OF FINANCIAL POSITION receivables (A/R – related
loan)

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 Note receivable discounted Disclosed in notes; deducted Reclassification Adjustments – amounts reclassified to P/L
from total receivables in the current period that were recognized in OCI in the
Cash surrender value Other long-term investments current or previous periods
Treasury/reacquired shares Deduction from SHE
*If cumulative G/L recognized in equity is derecognized,
transfer directly to retained earnings instead of P/L
STATEMENT OF COMPREHENSIVE INCOME
Type of OCI Reclassification
PAS 1 requires the presentation of: adjustment
allowed?
a. Profit or loss Changes in revaluation surplus No
b. Other Comprehensive income Remeasurements of net defined No
c. Comprehensive income benefit liability (Asset)
FV changes in FVOCI No
*Presenting only an income statement is prohibited
(equity instrument: election)
*Presenting extraordinary items in P/L and OCI or in the FV changes in FVOCI (debt Yes
notes is prohibited by PAS 1 instrument: mandatory)
Translation differences on foreign Yes
Profit or loss statement operations
Effective Portion of cash flow Yes
- Income less expenses hedges
- Excludes components of OCI and items required to be
recognized outside P/L
STATEMENT OF CHANGES IN EQUITY
Not included in determining P/L
Shows the following information:
Correction of prior period Adjust to beginning balance
error of RE; present in SOCIE 1. Retrospective application of accounting policy and
Change in accounting policy retrospective restatement due to correction of a prior
OCI Other comprehensive period error – ADJUST TO BEG. RE
income; equity line item in 2. Total comprehensive income for the period
SOFP 3. Reconciliation between CA @ beg and ed for each
Transactions with owners: Recognized directly in equity component
1. Issuance of share equity; present in SOCIE a. P/L
capital b. OCI
2. Declaration of c. Transactions with owners (share issuances,
Dividends dividends

Non-owner changes: SOCI

Presentation of expenses Owner changes: SOCIE
1. Nature of expenses method
2. Function of expense method/ cost of sales method
a. Cost of sales
b. Distribution costs/ selling expenses
c. Administrative expenses - residual
d. Other expenses (e.g. losses)
e. Finance costs (Interest expenses)
f. Income tax expense

Other Comprehensive Income

1. Changes in revaluation surplus

2. Remeasurements of assets
3. G/L of FA-FVOCI
4. G/L from translation
5. Effective portion of G/L on hedging instruments in a cash
flow hedge
6. Changes in FA-FVPL attributable to credit risk
7. Changes in time value of option when option’s intrinsic
and time values are separated & only changes in intrinsic
values is designated as the hedge instrument

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 INTERIM FINANCIAL REPORTING Item/Account Interim Treatment/ Reporting
Inventories @ LCNRV
PAS 34
Recognize loss on inventory
- Interim financial reports are not mandated, but may be
whether temporary or nontemportary
required by other entities
- Encourages public entities to provide at least a semi- Required disclosure of writedown
annual FR for the first half of the year not less than 60 and reversal of such in a later
days after the end of the interim period interim period
- Focuses on significant events and transactions that have Seasonal, cyclical, Recognized as incurred
occurred since the latest annual period occasional revenue
- Condensed: no greater detail required other than Not anticipated, even if highly
headings and subtotals predictable
Uneven costs Anticipated/deferred only if
SEC and PSE appropriate at the end of the year
Year-end bonuses Anticipated if and only if:
- Requires entities to file quarterly interim financial reports a) Bonus is a legal obligation or a
within 45 days after then end of each of the first 3 past practice that makes it a
quarters constructive obligation
b) Reliable estimate can be made
Views Irregular costs Recognized as incurred/ not
1. Integral view - Annual expenses are estimated, then anticipated
Depreciation/ Based only on assets owned during
allocated to interim periods based on forecasted revenue
amortization the interim period
2. Independent view – no estimations or allocations, unless
Paid vacation and Accrued/anticipated (legal
such estimations are allowed for annual reporting; actual holiday leave obligation)
expenses are recognized in interim periods incurred, Gain and loss Recognized when realized/incurred
regardless of periods benefited Income tax Accrued/anticipated using annual
Selected Explanatory Notes – provides explanation of effective income tax rate applied to
the income of the interim period
significant events since the last annual FS; same notes in
annual FR If various tax rates:
Interim Statement Comparative Statement/s Cumulative tax up using XX
SOFP, interim Annual SOFP, previous year effective tax rate
Total tax of previous (X
P/L and OCI, interim P/L and OCI, cumulative current
interim periods X)
P/L and OCI, interim period
Income tax expense, XX
Others Cumulative current
interim period

Basic Principles Difference in FR year and

tax year: follow effective
1. Same accounting policies as annual FS; year-to-date tax rates per year
basis Change in Reflected in current and comparative
2. Revenues = same basis as annual accounting policy interim periods
3. Costs
a. Matched with revenue
b. No match = incurred/ allocated over periods
benefited
4. If business is seasonal, required to disclose financial
info:
a. For the latest 12 months
b. Comparative info for the prior comparable
12-monthe period
5. Greater use of estimation than in the annual reports

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