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IAS -1 Presentation of Financial Statements

IAS-1 sets out the overall requirements for financial statements,

including how they should be structured, the minimum requirements for their content and
overriding concepts such as going concern, the accrual basis of accounting and the current/non-
current distinction.

1.Scope

IAS 1 applies to all general-purpose financial statements that are prepared and presented in
accordance with International Financial Reporting Standards (IFRSs). [IAS 1.2]

General purpose financial statements are those intended to serve users who are not in a position
to require financial reports tailored to their particular information needs. [IAS 1.7]

1.2. Structure of Financial Statements

IAS 1 requires an entity to clearly identify: [IAS 1.49-51]

the financial statements, which must be distinguished from other information in a published
document each financial statement and the notes to the financial statements.

In addition, the following information must be displayed prominently, and repeated as necessary:
[IAS 1.51] the name of the reporting entity and any change in the name whether the financial
statements are a group of entities or an individual entity information about the reporting period
the presentation currency (as defined by IAS 21 The Effects of Changes in Foreign Exchange Rates)
the level of rounding used (e.g. thousands, millions).
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Exceptional items are the name often given to material items of income and expense of such size,
nature or incidence that disclosure is necessary in order to explain the performance of the entity.
The accounting treatment is to:

• include the item in the standard statement of profit or loss line

• disclose the nature and amount in the notes.

The Word Extra ordinary item is specifically disallowed to be used in financial statements
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Company Name
Statements of Changes in Equity
for the year ended -------

Share Share Revaluation Other Retained Equity

Capital Premium Reserve Equity
Earnings Option
Reserves

$ $ $ $ $ $

Opening bal.
xx xx xx xx xx xx

Previous year (xx)

fraud/error/changes
in accounting policy

Right issue xx xx

Bonus issue xx (xx)

Total xx xx xx
Comprehensive
income

Ordinary dividend (xx)

IAS-16 PPE(transfer) (xx) xx

Closing balance xxx xxx xxx xxx xxx xxx

The SOCIE provides a summary of all changes in equity arising from transactions with owners in
their capacity as owners.

This includes the effect of share issues and dividends.

Other non-owner changes in equity, such as comprehensive income, are disclosed in aggregate
only
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Question-1

At 30 September 20X2 the trial balance of Cavern Co includes the following balances:

$'000

Equity shares of 20c each 50,000

Share premium 15,000

Cavern Co has accounted for a fully subscribed rights issue of equity shares made on 1 April 20X2 of one
new share for every four in issue at 42 cents each. This was the only share issue made during the year.

Show the balances on the share capital and share premium accounts at 30 September 20X1?

Question-2

At 30 September 20X2 the trial balance of Yasir Co includes the following balances:

$'000

Equity shares of 50c each 60,000

Share premium 50,000

Yasir Co has accounted for a fully subscribed rights issue of equity shares made on 1 April 20X2 of two
new shares for every five in issue at 80 cents each. This was the only share issue made during the year.

Show the balances on the share capital and share premium accounts at 30 September 20X1?
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1.3 Current and non-current classification

An entity must normally present a classified statement of financial position, separating current and non-
current assets and liabilities, unless presentation based on liquidity provides information that is reliable.
[IAS 1.60]

Current assets are assets that are: [IAS 1.66]

• expected to be realized in the entity's normal operating cycle

• held primarily for the purpose of trading

• expected to be realized within 12 months after the reporting period

• cash and cash equivalents (unless restricted).

All other assets are non-current. [IAS 1.66]

Current liabilities are those: [IAS 1.69]

• expected to be settled within the entity's normal operating cycle

• held for purpose of trading

• due to be settled within 12 months

• for which the entity does not have the right at the end of the reporting period to defer settlement
beyond 12 months.

Other liabilities are non-current.

When a long-term debt is expected to be refinanced under an existing loan facility, and the entity has the
discretion to do so, the debt is classified as non-current, even if the liability would otherwise be due within
12 months. [IAS 1.73]

If a liability has become payable on demand because an entity has breached an undertaking under a long-
term loan agreement on or before the reporting date, the liability is current, even if the lender has agreed,
after the reporting date and before the authorisation of the financial statements for issue, not to demand
payment as a consequence of the breach. [IAS 1.74]

However, the liability is classified as non-current if the lender agreed by the reporting date to provide a
period of grace ending at least 12 months after the end of the reporting period, within which the entity can
rectify the breach and during which the lender cannot demand immediate repayment. [IAS 1.75]
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Question-1
At 30 September 20X2 the trial balance of Cavern Co includes the following balances:
$'000
Equity shares of 20c each 50,000
Share premium 115,000
Retained Earnings 105,000
Revaluation reserve 12000
Other equity reserve 22000

Cavern Co has accounted for a fully subscribed rights issue of equity shares made on 1 April 20X2 of Three
new share for every eight in issue at 70 cents each. This was the only share issue made during the year.
Income statement extracts for the year ended
$ 000
PAT 20,000
OCI
Rev Gain on PPE 2550
FVTOCI loss (6500)

Company declared a dividend of 10 cents per share during the year at 30 June 2002.
There was a fraud in the previous year of $5500,000 in the last year discovered n during year

Required
Prepare statement of changes in Equity
Solution -1
Equity Share Retained Revaluation Other equity Total
shares premium Earnings reserve reserve
Opening Bal 36,364 80,909 105,000 12000 22000

Previous Year Fraud (5500)

Restated Balance

Right Issue 13,636 34,091

Total comprehensive 20,000 2550 (6500)

Income

Dividend (25000)

Closing Balance 50,000 115,000 94,500 14550 15,500

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Dividend = (250,000*0.10) = 25000