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
Dilution arises when the inclusion of the potential ordinary shares BASIC EARNINGS PER SHARE decreases the basic earnings per share or increases the basic loss per Basic EPS= Net income/ Ordinary shares outstanding share. The computation of the diluted earnings per share is based on the An entity shall calculate basic earnings per share amounts “as if” scenario; for profit or loss attributable to ordinary equity holders of a) Convertible bonds payable- assumes that the bond payable is converted into ordinary share. Thus, adjustments shall be made to the parent entity and, if presented, profit or loss from net income and to the number of ordinary shares outstanding. continuing operations attributable to those equity holders. b) Convertible preference share- assumes that the preference share is Where share dividends or share splits create a change in converted into ordinary share. Net income is not reduced anymore by the capital structure, the increase or decrease in the the amount of preference dividend. number of shares shall be recognized retroactively. 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