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    Chapter 10 (With Problems)

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    valix vol 3

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    Chapter 10 (With Problems)

    Uploaded by

    Abigail Padilla
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    valix vol 3

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    valix vol 3

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
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    Download as pdf
    2 views30 pages

    Chapter 10 (With Problems)

    Uploaded by

    Abigail Padilla
    valix vol 3

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
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    CHAPTER 10 INTERIM FINANCIAL REPORTING TECHNICAL KNOWLEDGE To understand the nature of interim financial reporting in contrast to annual financial reporting. To know the basic principles of interim financial reporting. To identify the components of an interim financial report. To be able to prepare and present comparative interim financial statements. 255 PORTING ans the preparation an, fora period of less than on, INTERIM FINANCIAL RE orting me mierim. financial rep Interim fi ments presentation of, financial state year. ant f an interim finang;, PAS 34 prescribes the minimum content 0} neial . nc cognition and measurement jp report and the principles for ret maents for an inter complete or condensed financial sta " im period. Interim financial reports may be pres or semiannually. Quarterly inter common However, publicly traded entities are encouraged to provide interim financial reports at least semiannually and such reports are to be made available not later than 60 days after the end of interim period. sented monthly, quarterly ‘m reports are the most Frequency of interim reporting PAS 94 does not mandate which entities are required to, publish interim financial reports, how frequently,.or how soon after the end of an interim period. Philippine jurisdiction The Securities and Exchange Commission and Philippine Stock Exchange require entities covered by the reportorial requirements of Revised Securities Act to file quarterly interim financial reports within 45 days after the end of each of the first three quarters. The SEC also requires entities cover ‘ r ed by the Rules 00 Commercial Papers and Financing Act to fil cial reports within 45 days after each quarter-ent ae Entities that provide interim financial i ¢ ae eas rae Te reports in conformity with Philippine Financial Reporting Standards shall confot®™ to the recognition, measureme; ‘ ' nt i i get out in the standard. nt and discloeure roquirerseo? 256 qwo views on interim financial reporting phe integral view is that each interi iod i i ‘al part of the annual account penne a intern ing period. under the integral view, annual Operating expenses are estimated and then allocated to the interim periods based on forecasted revenue or sales volume, In other words, costs incurred which clearly benefit the entire year ave allocated to the interim periods benefited. Estimation and allocation a: t 7 re necessary to avoid creating misleading fluctuations in in terim period income. Using the integral view would result to interim income which would be more indicative of the annual income and thus useful in predicting future operations and making informed decisions. The independent view is that each interim period is considered a discrete or separate accounting period with status equal toa fiscal year. Thus, no estimations or allocations are made for interim purposes, unless such estimations or allocations are allowed for annual reporting. The same expense recognition rules shall apply as under annual reporting and no special interim accruals or deferrals are permitted. In other words, annual operating expenses are recognized in the interim period when incurred, irrespective of the number of interim periods benefited, unless deferral or accrual would be allowed in the annual financial statements. Which view is followed in practice? PAS 34 on interim financial reporting does not mention about the two views, Essentially, the standard adopts a mix of the integral and independent views. 257 Yr Ny Components of an interim financial report 8, provides that an interim Financia) FAS 84, paragraph de, at a minimum, the following report shall inclu components: a. Condensed statement of financial position b. Condensed statement of comprehensive income c. Condensed statement of changes in equity d. Condensed statement of cash flows e. Selected explanatory notes Paragraph 8A provides that an’ entity can present items of profit or loss in a separate condensed income statement. Nothing in the standard is intended to prohibit or discourage an entity from publishing a complete set of financial statements, rather than condensed financial statements and selected explanatory notes. In other words, PAS 34 allows an entity to publish a set of condensed financial statements or complete set of financial statements in the interim financial report. "Condensed" means that each of the headings and subtotals presented in the entity's most recent annual financial statements is required but there is no requirement to include greater detail unless this is specifically required. Disclosure of compliance with PFRS PAS 34, paragraph 19, provides that if an entity's interim financial report is in compliance with Philippine Financial Reporting Standards, such fact shall be disclosed. An entity shall not describe complying with PFRS unle. requirements of each app! Reporting Standard, an interim financial report # 8s it complies with all of th? licable Philippine Financ 258

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