IAS 1: PRESENTATION OF FINANCIAL

FINANCIAL STATEMENTS STATEMENTS STRUCUTURE AND CONTENT

PURPOSE: GENERAL FEATURES:
to provide information about the financial position, financial performance and 1. True and fair view-requires the faithful representation of the effects of
cash flows of an entity that is useful to users in making economic decisions. transactions.
2. Going concern-management shall make an assessment of an entity’s
COMPLETE SET OF FINANCIAL STATEMENTS: ability to continue as a going concern.
a. a statement of financial position as at the end of the period; 3. Accrual-financial statements, except for cash flow information, are
b. a statement of profit or loss and other comprehensive income for prepared using accrual basis.
the period; 4. Materiality and Aggregation-present separately each material class of
c. a statement of changes in equity for the period; similar items.
d. a statement of cash flows for the period; 5. Offsetting-entity shall not offset asset and liability or income and
e. notes, comprising significant accounting policies and other expense.
explanatory information; 6. Frequency-present a complete set of financial statements at least
f. a statement of financial position as at the beginning of the annually.
preceding periodc 7. Comparatives-present comparative information in respect of the
preceding period for all amounts reported in the current period.
STATEMENT OF FINANCIAL POSITION 8. Consistency-retain the presentation and classification of items in the
financial statements from one period to the next.
ASSET= LIABILTY- EQUITY
EQUITY is the residual interest in the assets of the entity after deducting all of its
liabilities. NOTES TO FINANCIAL STATEMENTS
CURRENT ASSET/LIABILITY: Used to report information that does not fit into the body of the financial
NON-CURRENT ASSET/LIABILITY: statement in order to enhance the understandability of the financial
no more than twelve months more than twelve months statements.
after the reporting period, after the reporting period.
Two forms of statement of financial position
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME REPORT FORM ACCOUNT FORM
a) PROFIT OR LOSS- total income less expenses, excluding the components Assets are shown on the left
This form sets forth the three
of other comprehensive income. side and liabilities and equity
major section in a downward
b) OTHER COMPREHENSIVE INCOME- comprises items of income and on the right side of the
sequence of asset, liabilities,
expense including reclassification adjustments that are not recognized in statement of the financial
and equity.
profit or loss. position.
 IAS 33: EARNINGS PER SHARE
Is the amount attributable to every ordinary share outstanding
during the period. Thus, earning per share information pertains
only to ordinary share.

USES OF EARNINGS PER SHARE PRESENTATION

a) Determinant of the market price of An entity shall present on the face of the income
ordinary share. RETROSPECTIVE ADJUSTMENTS statement basic and diluted earnings per share for
Involves altering past financial income or loss from continuing operations. An entity
b) Measure of performance of
information according to a new that reports discontinued operation shall disclose the
management in conducting basic amount per share for the discontinued
operations. accounting principle, as if that operation either on the face of the income statement
c) Basis of dividend policy of an entity. principle had always been applied. or in the notes to the statements.

DILUTED EARNINGS PER SHARE

BASIC EARNINGS PER SHARE
Basic EPS= Net income/ Ordinary shares outstanding
 An entity shall calculate basic earnings per share amounts
for profit or loss attributable to ordinary equity holders of
the parent entity and, if presented, profit or loss from
continuing operations attributable to those equity holders.
 Where share dividends or share splits create a change in
the capital structure, the increase or decrease in the
number of shares shall be recognized retroactively.
Dilution arises when the inclusion of the potential ordinary shares
decreases the basic earnings per share or increases the basic loss per
share. The computation of the diluted earnings per share is based on the
“as if” scenario;
a) Convertible bonds payable- assumes that the bond payable is
converted into ordinary share. Thus, adjustments shall be made to
net income and to the number of ordinary shares outstanding.
b) Convertible preference share- assumes that the preference share is
converted into ordinary share. Net income is not reduced anymore by
the amount of preference dividend.
c) Options and warrants- are dilutive if the exercise price or option price
is less than the average market price of the ordinary share. These are
included in the EPS computation through the treasury share method.
 IFRS 1: First‑time Adoption of International
Financial Reporting Standards
An entity is considered first time adopter when for the first time such entity
makes an explicit and unreserved statement that its general purpose financial
statements comply with International Financial Reporting Standards.

DATE OF TRANSITION TO IFRS

FIRST PFRS FINANCIAL STATEMENTS The date of transition to PFRS depends on two factors, namely:
Financial statements presented by an entity in the a) Date of adoption to IFRS
current year would qualify as first financial b) Number of years of comparative information that an entity decides to present
statements under the following condition. together with the financial statements in the year of adoption.
1. When an entity presented its most recent
previous financial statements: OPENING PFRS STATEMENT OF FIRST PFRS FINANCIAL
a) Under national GAAP inconsistent with IFRS in FINANCIAL POSITION STATEMENTS
all aspect.
b) In conformity with PFRS in all respect but this It is the starting point for It includes:
statements did not contain an explicit and accounting in accordance with 1. Three statements of financial position
unreserved statement that they complied with at the end of current year, at the end
IFRS. Entity is required to;
IFRSs; of prior year and at the date of
c) containing an explicit statement of compliance 1. Recognize all assets and transition to IFRS.
with some, but not all, IFRSs; liabilities required by IFRS. 2. Two statements of comprehensive
d) Under national GAAP with a reconciliation of 2. Derecognize assets and income for the current year and prior
selected figures to amounts determined under
IFRS. liabilities not permitted by year.
2. When an entity prepared financial statements in IFRS. 3. Two separate income statement for
accordance with IFRS for internal use only. 3. Reclassify items that is current year and prior year.
3. When an entity prepared financial statements in 4. Teo statement of changes in equity for
recognized under previous
accordance with IFRS for consolidated purposes the current year and prior year
GAAP 5. Two statements of cash flow for the
without a complete set of financial statements.
4. Measure all recognized assets current year and prior year
4. When an entity did not present financial
statements in the previous period. and liabilities in compliance 6. Notes to financial statements including
with IFRS. comparative information