THE ACCOUNTANCY PROFESSION
entity only.
 Accounting Standards Counsel- Accounting is a
service activity. The accounting function is to
provide quantitative information, primarily
financial in nature, about economic entities,
that is intended to be useful in making
economic decision.
 American Institute of Certified Public
Accountants- Accounting is the art of recording,
classifying and summarizing in a significant
manner and in terms of money, transactions
and events which are in part at least of a
financial character and interpreting the results
thereof.
 American Accounting Association- Accounting
is the process of identifying, measuring and
communicating economic information to permit
informed judgment and decision by users of the
information.
 The following important points made in the
definitions of accounting should be noted:
One – Accounting is about quantitative
information.
Two – The information is likely to be financial
in nature.
Three – The information should be useful in
decision-making. The information is useful if it
can affect your decision-making.
The definition that has stood the test of time is
the definition given by the American
Accounting Association.
The three (3) components are namely:
A. Identifying as the analytical component.
B. Measuring as the technical component.
C. Communicating as the formal component.
 IDENTIFYING- as the analytical component. It
becomes analytical when you identify whether
the transaction should be recognized or not.
There are two economic transactions:
Internal Transaction- economic events involving the
External Transaction- economic events involving one
entity and another entity.
 MEASURING- as the technical component.
Figuring out the values or the amount of the
transaction.
 COMMUNICATING- as the formal component.
The process of preparing and distributing
accounting reports to potential users. The
reason why accounting is called “The universal
language of business”.
The process is:
Recording/Journalizing- systematical maintaining of all
business transactions after being identified and
measured.
Classifying/Posting- the sorting of similar and
interrelated economic events to their respective classes
whether an asset, liability, equity, income, or expense
account. Accomplished by posting to the ledger.
Summarizing- the preparation of financial statements
which includes Statement of Financial Position,
Statement of Comprehensive Income, Statement of
Changes in Equity, and Statement of Cash flow.
 The Accounting Profession- From 2004 to the
present, the act/law regulating the practice of
accountancy in the Philippines is Republic Act
No. 9298 or the Philippine Accountancy Act of
2004.
 Professional Regulatory Board of Accountancy-
Board of Accountancy is created because of the
Article II of the Accountancy Act. It is composed
of six members and a chairman, all of whom are
appointed by the President of the Philippines.
 To receive Certificate of Accreditation to CPA in
public practice, you should have at least three
years of meaningful experience in any areas of
public practice including taxation.
 The Certificate of Accreditation is valid for three
years and renewable every three years upon
payment of the required fees.
 Areas of Profession
 Public Practice- includes individual
practitioners/freelancers, not employed to any
company that offers auditing, tax services, and
management counseling services.
Auditing- specifically external auditing, is the
examination of financial statements by
independent certified public accountant for the
purpose of expressing an opinion as to the
fairness with which the financial statements are
prepared. Auditing starts after an accountant
provides the financial statements.
Tax Services- the preparation of annual income
tax returns and determination of tax
consequences of certain proposed business
endeavors.
Management Advisory Services- include advice
on installation of computer system, quality
control, installation and modification of
accounting system, budgeting, forecasting,
design or modification of retirement plans and
even entity mergers and takeovers.
CPA of Public practice is part of the Association of
Certified Public Accountants in Public Practice
(ACPAPP)
 Commerce and Industry- employed by private
companies hence, the name Private
Accountants. They usually assist management in
planning and controlling a company’s operation.
Includes budget officers, cost accountants,
internal auditors, chief accountants or
controllers, finance officers, etc.
CPA of Commerce and Industry/ Private Accountants
are part of the Association of Certified Public
Accountants in Commerce and Industry (ACPACI)
 Education- this sector employs CPAs as
professors, reviewers, or researchers.
CPA of Education are part of the National Association
of Certified Public Accountants in Education (NACPAE)
 Government- CPAs hired by the government
units such as Bureau of Internal Revenue,
Commission on Audit, Department of Finance,
Securities and Exchange Commission, and the
Department of Budget and Management.
CPA of Government are part of the Government
Association of Certified Public Accountants (GACPA)
 Continuing Professional Development (CPD)-
promulgated by the BoA and subject to the
approval of the Professional Regulation
Commission to be renewed by the CPA in
Education.
CPA CREDIT UNITS- the required units for
license renewal are 15 CPD units and 120 CPD
units for renewal in accreditation.
EXEMPTION FROM CPD- exempted in license
renewal but not renewal of accreditation at the
age of 85.
CONCEPTS IN ACCOUNTING
 GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES (GAAP)- is the set of rules,
principles, standards, conventions, and
underlying assumptions that are used when
preparing Financial Statements. Serves as a
guide for individuals in the accounting
profession.
 FINANCIAL REPORTING STANDARD COUNCIL
(FRSC)- created by the Professional Regulation
Commission, primarily task to improve and
establish accounting standards. Composed of
one (1) chairperson and fourteen (14)
representatives appointed by BoA from:
Board of Accountancy- 1
Securities and Exchange Commission- 1
Bangko Sentral ng Pilipinas- 1
Financial Executives Institute of the Philippines- 1
Commission on Audit- 1
Bureau of Internal Revenue- 1
 PICPA (Public Practice)- 2

ACPACI (Commerce and Industry)- 2 NACPAE

(Education)- 2 PICPA (Government)- 2
ACCREDITED PROFESSIONAL ORGANIZATION
 Three (3) years of term and renewal for the next
The Philippine Institute of Certified Accountants or
term.
PICPA is the accredited professional organization (APO)
Setting Previous Replaced by: of CPAs by the Professional Regulation Commission
Local ASC FRSC (formally (PRC).
written by
Objectives:
GAAP)
International IASC (Formed in IASB The group set forth the following objectives:
June 1973 from (International
Australia, Accounting 1. To promote and maintain high professional and
Germany, Standards ethical standards among accountants;
Canada, Japan, Board)
Mexico, France, 2. To advance the science of accounting;
Netherlands, 3. To develop and improve accountancy education;
USA, UK, and
Ireland) 4. To encourage cordial relations among accountants,
and

 Philippine Financial Reporting Standard (PFRS)- 5. To protect the Certificate of Certified Public
Includes: Accountant granted by the Republic of the Philippines.

Philippine Accounting Standard (PAS)

Philippine Financial Reporting Standard (PFRS) CONCEPTUAL FRAMEWORK AND ACCOUNTING

STANDARD
Philippine Interpretation Committee (PIC)-
authoritative guidance. Formed by FRSC in August 2006. SCOPE

Purpose: The Conceptual Framework deals specifically with:

1. The objective of general-purpose financial reporting;

 The overall purpose of accounting standards is
to identify proper accounting practices for the 2. The qualitative characteristics of useful financial
preparation and presentation of financial information;
statements.
3. The definition, recognition and measurement of the
 Accounting standards create a common
elements from which financial statements are
understanding between preparers and users of
constructed; and
financial statements particularly the
measurement, of assets and liabilities. 4. Concepts of capital and capital maintenance.
 A set of high-quality accounting standards is a
necessity to ensure comparability and  Its purpose is to guide the International
uniformity in financial statements based on the Accounting Standards Board (IASB) when it
same financial information. develops International Financial Reporting
Standards. It sets out the concepts that underlie
the preparation and presentation of financial
Local PFRS (Highest statements for external users. Was issued in
Hierarchy September 2010 and revised in March 2018.
developed by FRSC)
International IFRS
  If no standard from PFRC is given, they can
follow the conceptual framework and use it as
back-up.
It is NOT the standard; it is NOT IFRS Standard
and IFRS always prevail. Conceptual Framework
could be revised from time to time.
Its objective is to be useful to its users:
Primary Users- Investors, Lenders and Creditors
Other Users- Employees, Suppliers or Trader,
Government Agencies, and Public
However, the general-purpose financial report do not
and cannot provide all the information that the users
need.
A. QUALITATIVE CHARACTERISTICS OF FINANCIAL
STATEMENTS
1. Relevance- is the capability of financial
information to make a difference in the
decision made by users.
1.1 Predictive Value- if financial
information can be used as an
input by the users to predict
future outcomes.
1.2 Confirmatory Value- enables
users to check and confirm earlier
predictions and evaluations.
1.3 Materiality- material if omitting it
or misstating it could influence
decisions that users make on the
basis of financial information
about a specific reporting entity.
2. Faithful Representation- it must not
only represent a relevant phenomena
but also represent the substance of it
2.1 Complete- a complete depiction
includes all information, necessary
descriptions and explanations.
2.2 Neutral- a depiction is without bias
and is supported by prudence that does
not allow for overstatement or
understatement of assets, liabilities,
revenues, and expenses.
2.3 Free from Error- means there are
no errors or omissions in the
description of the phenomenon.
B. ENHANCING QUALITATIVE CHARACTERISTICS
There are four (4) qualitative characteristics that
enhance the usefulness of relevant and faithfully
represented information:
1. Verifiability
2. Comparability
3. Understandability
4. Timeliness
1. Verifiability- means that different
knowledgeable and independent observers
could reach consensus, although not necessarily
complete agreement, that a particular depiction
is a faithful representation. Can be direct or
indirect.
Direct verification means verifying an amount
or other representation through direct
observation.
Indirect verification means checking the inputs
to a model, formula or other technique and
recalculating the outputs using the same
methodology.
1. Comparability- is somehow related to
consistency, but both are different. Consistency
refers to the use of the same methods for the
same period, while Comparability enables users
to identify and understand similarities in, and
differences among items.
2. rel- means classifying, characterizing, and
presenting information clearly and concisely.
3. Timeliness- means having information available
to decision-makers in time to be capable of
influencing their decisions. The older the
information is, the less useful it is.
 C. Cost Constraint- The users must assess the
benefit of providing the information needs to
justify the cost of providing using the
information. (Cost-Benefit Principle)
FINANCIAL STATEMENTS
 ELEMENTS OF FINANCIAL STATEMENTS
Underlying Assumption of the Conceptual Framework
Going Concern- financial statements are normally
prepared with the assumption that the company is a
going concern (tuloy-tuloy at hindi mag-liquidate or
mag-end) and will continue operation for the
foreseeable future. That there is neither a need or an
intention to liquidate.
The Elements of Financial Statements
Financial statements portray the financial effects of
transactions and other events by grouping them into
broad classes:
 Financial Position - the elements directly
related to the measurement of financial
position are assets, liabilities and equity.
 Financial performance - the elements directly
related to the measurement of profit are
income and expenses.
 obligation to equity.
ASSETS- An asset is defined as a present economic
resource controlled by the entity as a result of past
events and from which future economic benefits are
expected to flow to the entity.
1. Present economic resource A right, or an
economic resource, is not a physical object,
such as an item of property, plant and
equipment, but a set of rights over the object –
the right to use, sell, or pledge the object, as
well as other undefined rights.
2. Control both encompasses a power and
benefits elements. An entity must have the
present ability to direct how a resource is used
and be able to obtain the economic benefits
from that resource in order to control it.
3. Potential to produce future economic benefits
The future economic benefit embodied in an
asset is the potential to contribute, directly or
indirectly, to the flow of cash and cash
equivalents to the entity in
LIABILITIES- A liability is defined as a present obligation
of the entity to transfer an economic resource as a
result of past events.
1. Present obligation
This is an essential characteristic of a liability. An
obligation is a duty or responsibility to act or perform in
certain way. Obligations are established by contract,
legislation or similar means. Obligations may also arise,
however, from an entity’s customary practices,
published policies or specific statements if the entity
has no practical ability to act in a manner inconsistent
with those practices, polices or statements. These are
sometimes referred to as a “constructive obligation”
2. Obligation to transfer an economic resource
The settlement of a present obligation usually involves
the entity giving up resources embodying economic
benefits in order to satisfy the claim of the other party
Settlement may be by payment of cash, transfer of
other assets, provision of services, replacement of that
obligation with another obligation or conversion of the
3. Present obligation as a result of past events
Liabilities result from past transactions or other past
events. Thus, for example, the acquisition of goods and
the use of services give rise to trade payables (unless
paid for in advance or on delivery) and the receipt of a
bank loan results in an obligation to repay the loan.
EQUITY
Equity is the residual interest in the assets of the entity
after deducting all its liabilities. In other words, they are
claims against the entity that do not meet the definition future economic benefits associated with the item will
of liability. flow to or from the entity.

INCOME Assessments of the degree of uncertainty attaching to

the flow of future economic benefits are made on the
Income is increases in economic benefits during the
basis of the evidence available when the financial
accounting period in the form of inflows or
statements are prepared.
enhancements of assets or decreases of liabilities that
result in increases in equity, other than those relating to
contributions from equity participants. It encompasses
both revenue and gains.

Revenue arises in the course of the ordinary activities of

an entity. Gains represent increases in economic RELIABILITY OF MEASUREMENT
benefits and as such are no different in nature from
revenue. The recognition of an item has a cost or value that can
be measured with reliability. In many cases, cost or
EXPENSES value must be estimated; the use of reasonable
estimates is an essential part of the preparation of
Expenses are decreases in economic benefits during the
financial statements and does not undermine their
accounting period in the form of outflows or depletions
reliability. When, however, a reasonable estimate
of assets or incurrences of liabilities that result in
cannot be made the item is not recognized but would
decreases in equity, other than those relating to
be disclosed in the notes, explanatory material or
distributions to equity participants. It encompasses
losses as well as those expenses that arise in the course
of the ordinary activities of the entity.

RECOGNITION AND DERECOGNITION

RECOGNITION- the process of capturing for inclusion in

the statement of financial position or the statement of
financial performance an item that meets the definition
of one of the elements of financial statements.

The amount at which an asset, liability or equity is

recognized in the statement of financial position is
referred to as its carrying amount.

An item that meets the definition of an element should

be recognized if:

A. it is probable that any future economic benefit

associated with the item will flow to or from
the entity; and
B. the item has a cost or value that can be supplementary schedules.
measured with reliability

THE PROBABILITY OF FUTURE ECONOMIC BENEFIT

DERECOGNITION OF THE ELEMENTS OF FINANCIAL
The concept of probability is used in the recognition STATEMENTS
criteria to refer to the degree of uncertainty that the
Derecognition occurs when the item no longer meets
the definition of an asset or liability. An asset is
derecognized when the entity loses control of all or part
of the recognized asset. A liability is derecognized when
the entity no longer has a present obligation for all or
part of the recognized liability.
MEASUREMENT OF ELEMENTS OF THE FINANCIAL
STATEMENT
Measurement is the process of determining the
monetary amounts at which the elements of the
financial statements are to be recognized and carried in
the statement of financial position or statement of
financial performance. This involves the selection of the
particular basis of measurement.
PRESENTATION AND DISCLOSURE
Information about assets, liabilities, equity, income and
expenses is communicated through presentation and
disclosures in financial statements. Effective
communication of financial statements makes that
information more relevant and contributes to a faithful
representation of an entity’s assets, liabilities, equity,
income and expenses. It also enhances the
understandability and comparability of information in
financial statements.
CONCEPTS OF CAPITAL AND CAPITAL MAINTENANCE
Concepts of Capital
FINANCIAL CONCEPT
Under a financial concept, capital is synonymous with
the net assets or equity of the entity. Financial concept
of capital should be adopted if the users of financial
statements are primarily concerned with the
maintenance of nominal invested capital or the
purchasing power of invested capital.
PHYSICAL CONCEPT
Under a physical concept, capital is regarded as the
productive capacity of the entity based on, for example,
units of output per day. Physical concept of capital
should be adopted if the users of financial statements
are primarily concerned with the operating capability of
the entity.
CONCEPTS OF CAPITAL MAINTENANCE AND
DETERMINATION OF PROFIT
The concept of capital maintenance is concerned with
how an entity defines the capital that it seeks to
maintain. It provides the linkage between the concepts
of capital and the concepts of profit because it provides
the point of reference by which profit is measured.
FINANCIAL CAPITAL MAINTENANCE
Profit is earned only if the financial amount of the net
assets at the end of the period exceeds the financial
amount of net assets at the beginning of the period,
after excluding any distributions to, and contributions
from, owners during the period. Financial capital
maintenance can be measured in either nominal
monetary units or units of constant purchasing power.
The financial capital maintenance concept, however,
does not require the use of a particular basis of
measurement. Selection of the basis under this concept
is dependent on the type of financial capital that the
entity is seeking to maintain.
PHYSICAL CAPITAL MAINTENANCE
Profit is earned only if the physical productive capacity
(or operating capability) of the entity (or the resources
or funds needed to achieve that capacity) at the end of
the period exceeds the physical productive capacity at
the beginning of the period, after excluding any
distributions to, and contributions from, owners during
the period. It requires the adoption of the current cost
basis of measurement.
PRESENTATION OF FINANCIAL STATEMENTS (SFP, SCI,
SCE)
Purpose:
are those intended to meet the needs of users who are
not in a position to require an entity to prepare reports
tailored to their particular information needs.
The objective of financial statements is to provide
information about the financial position, financial
performance, and cash flows of an entity that is useful
to a wide range of users in making economic decisions.
Financial statements also show the results of the
management’s stewardship of the resources entrusted
to it.
This are the Standards and Interpretations issued by the
International Accounting Standards Boards (IASB).
They comprise:
1. International Financial Reporting Standards
2. International Standards
3. IFRIC Interpretations
4. SIC Interpretations
COMPLETE SET OF FINANCIAL STATEMENTS
1. SFP- Balance Sheet
2. Statement of P/L and Comprehensive-
Income Statement
3. Statement of Changes in Equity
4. Statement of Cash Flow
5. Notes to Financial Statements-
significant notes of the company and
the financial statements.
6. Comparative Information- comparing
two (2) periods only.
Example: 2020- 100,000
2019- 90,000
7. Statements with Retrospective
Restatement- if there is a change in
accounting policy, retrospective
restatement is made. It is to compare
three (3) periods.
Example:
Dec. Dec. Jan.
2020 2019 2019 (which the ending
balance of 2018)
 The end of the current period
 The end of the preceding period and;
 The beginning of the preceding period
An entity may use titles for the statements other than
those used in the Standard. For example, an entity may
use the title ‘statement of comprehensive income’
instead of ‘statement of profit or loss and other
comprehensive income’.
An entity may present a single statement of profit or
loss and other comprehensive income, with profit or
loss and other comprehensive income presented in two
sections.
The sections shall be presented together, with the profit
or loss section presented first followed directly by the
other comprehensive income section.
An entity may present the profit or loss section in a
separate statement of profit or loss. If so, the separate
statement of profit or loss shall immediately precede
the statement presenting comprehensive income,
which shall begin with profit or loss.
GENERAL FEATURES
Fair presentation and compliance with PFRS-
Financial statements shall present fairly the financial
position, financial performance and cash flows of an
entity. Fair presentation requires the faithful
representation of the effects of transactions, other
events and conditions in accordance with the
definitions and recognition criteria for assets, liabilities,
income and expenses set out in the Framework. An
entity whose financial statements comply with PFRSs
shall make an explicit and unreserved statement of such
compliance in the notes.
Going Concern-
When preparing financial statements, management
shall make an assessment of an entity’s ability to
continue as a going concern. An entity shall prepare
financial statements on a going concern basis unless
management either intends to liquidate the entity or to
cease trading, or has no realistic alternative but to do
so. When an entity does not prepare financial
statements on a going concern basis, it shall disclose
that fact, together with the basis on which it prepared
the financial statements and the reason why the entity
is not regarded as a going concern.
Accrual Basis of Accounting-
An entity shall prepare its financial statements, except
for cash flow information, using the accrual basis of
accounting.
When the accrual basis of accounting is used, an entity
recognizes items as assets, liabilities, equities, income
and expenses (the elements of financial statements)
when they satisfy the definitions and recognition
criteria for those elements in the Conceptual
Framework.
Materiality and Aggregation
An entity shall present separately each material class of
similar items. An entity shall present separately items of
a dissimilar nature or function unless they are
immaterial. Financial statements result from processing
large numbers of transactions or other events that are
aggregated into classes according to their nature or
function. The final stage in the process of aggregation
and classification is the presentation of condensed and
classified data, which form line items in the financial
statements.
Material —> separate
Similar Immaterial —> aggregate
Material —> separate
Dissimilar Immaterial —> aggregate
Offsetting
An entity shall not offset assets and liabilities or income
and expenses, unless required or permitted by a PFRS.
An entity reports separately both assets and liabilities,
and income and expenses. Measuring assets net of
valuation allowances—for example, obsolescence
allowances on inventories and doubtful debts
allowances on receivables—is not offsetting.
Frequency of Reporting
An entity shall present a complete set of financial
statements (including comparative information) at least
annually. When an entity changes the end of its
reporting period and presents financial statements for a
period longer or shorter than one year, an entity shall
disclose, in addition to the period covered by the
financial statements:
a. the reason for using a longer or shorter period, and
b. the fact that amounts presented in the financial
statements are not entirely comparable.
Normally, an entity consistently prepares financial
statements for a one- year period. However, for
practical reasons, some entities prefer to report, for
example, for a 52-week period. The Standard does not
preclude this practice.
Comparative Information
Except when IFRSs permit or require otherwise, an
entity shall present comparative information in respect
of the preceding period for all amount reported in the
current period’s financial statements. An entity shall
include comparative information for narrative and
descriptive information if it is relevant to understanding
the current period’s financial statements.
Consistency of Presentation
An entity shall retain the presentation and classification
of items in the financial statements from one period to
the next unless:
a. it is apparent, following a significant change in the
nature of the entity’s operations or a review of its
financial statements, that another presentation or
classification would be more appropriate having regard
to the criteria for the selection and application of
accounting policies in AS 8; or
b. a PFRS requires a change in presentation
STRUCTURE AND CONTENT OF FINANCIAL STATEMENT
An entity shall clearly identify the financial statements
and distinguish them from other information in the
same published document. As such, it shall clearly
identify each financial statement and the notes. In
addition, an entity shall display the following
information prominently, and repeat it when necessary
for the information presented to be understandable:
1. the name of the reporting entity or other means of
identification, and any change in that information from
the end of the preceding reporting period;
2. whether the financial statements are of an individual
entity or a group of entities;
3. whether the financial statements are of an individual
entity or a group of entities;
4. the presentation currency; and
5. the level of rounding used in presenting amounts in
the financial statements
This can be achieved by presenting appropriate
headings for pages, statements, notes, columns, and
the like. Judgment is required in determining the best
way of presenting such information. In addition, an
entity may make financial statements more
understandable by presenting information in thousands
or millions of units of the presentation currency. This is
acceptable as long as the entity discloses the level of
rounding and does not omit material information.
STATEMENT OF FINANCIAL POSITION
 Assets, Liabilities, and Equity
An entity makes the judgement about whether to
present additional items separately on the basis of an
assessment of:
a. the nature and liquidity of assets;
b. the function of assets within the entity; and
c. the amounts, nature and timing of liabilities.
CURRENT ASSETS
An entity shall classify an asset as current when:
1. It expects to realize the asset, or intends to sell or
consume it, in its normal operating cycle.
2. It holds the asset primarily for the purpose of trading
3. It expects to realize the asset within twelve months
after the reporting period; or
4. The asset is cash or cash equivalents (as defined in
IAS 7) unless the asset is restricted from being
exchanged or used to settle a liability for at least twelve
months after the reporting period.
An entity shall classify all other assets as NON-CURRENT
ASSET.
CURRENT LIABILITIES
An entity shall classify a liability as current when:
1. It expects to settle the liability in its normal operating
cycle.
2. It holds the liability primarily for the purpose of
trading
3. The liability is due to be settled within twelve months
after the reporting period; or
4. It does not have an unconditional right to defer
settlement of the liability for at least twelve months
after the reporting period. Terms of a liability that
could, at the option of the counterparty, result in its
settlement by the issue of equity instruments do not
affect its classification.
An entity shall classify all other liabilities as NON-
CURRENT LIABILITIES.
Two forms of Financial Position
1. Report Form (Vertical)
2. Account Form (Horizontal)
STATEMENT OF P/L OR COMPREHENSIVE INCOME
the statement of profit or loss and other comprehensive
income (statement of comprehensive income) shall
present, in addition to the profit or loss and other
comprehensive income sections:
1. profit or loss;
2. total other comprehensive income;
3. comprehensive income for the period, being the total
of profit or loss and other comprehensive income. If an
entity presents a separate statement of profit or loss, it
does not present the profit or loss section in the
statement presenting comprehensive income.
An entity shall present the following items, in addition
to the profit or loss and other comprehensive income
sections, as allocation of profit or loss and other
comprehensive income for the period:
1. profit or loss for the period attributable to:
A. non- controlling interests, and
B. owners of the parent.
2. comprehensive income for the period attributable
to:
A. non- controlling interests, and
B. owners of the parent.
Revenue, presenting separately:
- Interest revenue calculated using the effective interest
method; and
- Insurance revenue under IFRS 17;
 Gains and losses arising from the derecognition
of financial assets measured at amortized cost;
 Insurance service expenses from contracts
issued within the scope of IFRS 17;
 Income or expenses from reinsurance contracts
held under IFRS 17;
 Finance Costs;
 Impairment losses (including reversals of
impairment losses or impairment gains)
determined in accordance with Section 5.5 of
IFRS 9;
 Insurance finance income or expenses from
contracts issued within the scope of IFRS 17;
 Finance income or expenses from reinsurance
contracts held under IFRS 17;
 Share of the profit or loss of associates and
joint ventures accounted for using the equity
method;
 If a financial asset is reclassified out of the
amortized cost measurement category so that
it is measured at fair value through profit or
loss, any gain or loss arising from a difference
between the previous amortized cost of the
financial asset and its fair value at the
reclassification date (as defined in IFRS 9);
 If a financial asset is reclassified out of the fair
value through other comprehensive income
measurement category so that it is measured
at fair value through profit or loss, any
cumulative gain or loss previously recognized in
other comprehensive income that is
reclassified to profit or loss.
 Tax expense
 A single amount for the total of discontinued
operations (see IFRS 5)
Other comprehensive income are items of income and
expense, including reclassification adjustments that are
not recognized in profit or loss as required or permitted
by IFRS.
Examples:
 Unrealized gain or loss on debt investment
measured at fair value through other
comprehensive income.
 Gain or loss from translating the financial
statements of a foreign operation
 Revaluation surplus during the year
 Unrealized gain or loss from derivative
contracts designated as cash flow hedge
 Remeasurements of defined benefit plan:
 –Actuarial gain and loss on projected benefit
obligation
–The difference between actual return on plan
assets and interest income on fair value of plan
assets
–Change in the effect of asset ceiling minus
interest on the beginning effect of asset ceiling
 An entity shall present additional line items,
headings and subtotals in the statement(s)
presenting profit or loss and other
comprehensive income when such
presentation is relevant to an understanding of
the entity’s financial performance.
 Subtotals, after presenting additional line
items, shall be:
- Be comprised of line items made up of
amounts recognized and measured in
accordance with IFRS;
- Be presented and labelled in a manner that
makes the line items that constitute the
subtotal clear and understandable;
- Be consistent from period to period;
- Not be displayed with more prominence that
the subtotals and totals required in IFRS for the
statement(s) presenting profit or loss and other
comprehensive income.
 Because the effects of an entity’s various
activities, transactions and other events differ
in frequency, potential for gain or loss and
predictability, disclosing the components of
financial performance assists users in
understanding the financial performance
achieved and in making projections of future
financial performance.
 An entity shall not present any items of income
or expense as extraordinary items, in the
statement(s) presenting profit or loss and other
comprehensive income.
 An entity shall recognize all items of income
and expense in a period in profit or loss unless
an IFRS requires or permits otherwise.
 An entity shall disclose the amount of income
tax relating to each item of other
comprehensive income, including
reclassification adjustments, either in the
statement of profit or loss and other
comprehensive income or in the notes.
 An entity shall disclose reclassification
adjustments relating to components of other
comprehensive income.
 Other IFRSs specify whether and when
amounts previously recognized in other
comprehensive income are reclassified to profit
or loss. Such reclassifications are referred to as
reclassification adjustments.
 A reclassification adjustment is included with
the related component of other comprehensive
income in the period that the adjustment is
reclassified to profit or loss.
 The amounts may have been recognized in
other comprehensive income as unrealized
gains in the current or previous periods.
 Those unrealized gains must be deducted from
other comprehensive income in the period in
which the realized gains are reclassified to
profit or loss to avoid including them in total
comprehensive income.
Other comprehensive income that will be reclassified
subsequently to P/L:
- Gains or loss from translating financial statements of a
foreign operation
- Unrealized gain or loss on derivative contracts
designated as a cash flow hedge
- Unrealized gain or loss on debt investment measured
at fair value through OCI.
Other comprehensive income that will NOT be
reclassified subsequently to P/L:
- Unrealized gain or loss on equity investment measured
at fair value through OCI (reclassified to retained
earnings upon investment disposal)
- Change in revaluation surplus (realization is through
retained earnings)
- Remeasurements of a defined benefit plan (not
recycled subsequently to profit or loss but maybe
transferred with equity or retained earnings)
- Gain or loss attributable to credit risk of a financial
liability designated at fair value through profit or loss
(gain or loss may be recycled within equity or retained
earnings)
 An entity shall present an analysis of expenses
recognized in profit or loss using
reclassification using a classification based on
either their nature or their function within the
equity, whichever provides information that is
reliable and more relevant.
 An entity classifying by expenses by function
shall disclose additional information on the
nature of expenses, including depreciation and
amortization expense and employee benefits
expense.
STATEMENT OF CHANGES IN EQUITY
An entity classifying by expenses by function shall
disclose additional information on the nature of
expenses, including depreciation and amortization
expense and employee benefits expense.
A. total comprehensive income for the period, showing
separately the total amounts attributable to owners of
the parent and to non-controlling interests;
B. for each component of equity, the effects of
retrospective application or retrospective restatement
recognized; and
C. for each component of equity, a reconciliation
between the carrying amount at the beginning and the
end of the period, separately (as a minimum) 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.
Information to be presented in the statement of
changes in equity or in the notes
- For each component of equity an entity shall present,
either in the statement of changes in equity or in the
notes, an analysis of other comprehensive income by
item.
- An entity shall present, either in the statement of
changes in equity or in the notes, the amount of
dividends recognized as distributions to owners during
the period, and the related amount of dividends per
share.