IAS 1

Presentation of financial statements

Objective of IAS 1
• Present general-purpose financial statements so
that comparability is achieved between the entity’s
financial statements and
• Its own financial statements in previous periods
• Other entities’ financial statements
• The purpose of FS is to provide a structured
representation of an entity’s
• Financial position
• Performance
• Management’s stewardship of the resources
General features of Financial
statements
Fair Pr & Going Accrual
compliance concern basis

Materiality &
Aggregation

Comparati
Frequency
ve
Offsetting of
informatio
reporting
n
 Fair
presentation &
compliance
Consistency Going
of concern
Presentation

Comparative Financial Accrual

information Statement basis

Frequency of Materiality &

reporting aggregation

Offsetting
Complete Set of Financial
Statements
• Statement of financial position (SFP)
• Statement of comprehensive income (SOCI)
• Statement of changes in equity (SCE)
• Cash flow statement (CF)- IAS 7
• Notes to the financial statements
 Statement of financial position
Current vs Non-
current A/L

A= OE + L
Statement of comprehensive
income
Items to consider when preparing SOCI

• Single statement layout or Choice

- Includes P&L and OCI section
- Must include 3 totals: P/L; OCI; TCI
• two statement layout
- Presents P&L and SOCI separately
- include 3 totals: P/L; OCI; TCI
Going forward , assume single
statement layout
Nature vs function

Which method will give

you the highest profit?
Single statement layout- SOCI
Two statement layout- SOCI
SOCI- Analysis of expenses
• Function Method
- Expenses are allocated according to their purpose (tasks)
- Main functions are:
- Selling expenses
- Distribution Choice
- Administration
- Other operating expenses
• Nature Method Reliable and relevant
- No allocation is done information
- Suitable for smaller businesses
- Additional disclosure note is required i.t.o. IAS1.97
Statement of Changes in equity
• Presents Reconciliation b/n opening and closing
balances for each component of equity
• Presents separately OCI, P&L and TCI
• Presents transactions to owners separately( e.g.
dividends , share issue)
• Presents any retrospective adjustments to equity
Adjusting to prior year profit or loss

Prospective Retrospective

Adj the current year P&L Adj the prior year P& L

Retained Earnings

Separate line in SCE

Notes to the financial
statements

• Contain information in addition to each statement

• Support the items that are disclosed in the face of
AFS
• Cross- referenced
Pre-reading
• Capital management
• Dividends
• Accounting process- take one transaction (of
choice) from the beginning of the accounting
process, post it to the relevant ledgers until it is
presented in the financial statements.