This document provides an overview of PAS 1 on the presentation of financial statements. It discusses the components of a complete set of financial statements, which includes the statement of financial position, statement of profit or loss and other comprehensive income, statement of changes in equity, statement of cash flows, and notes. It describes the general features of financial statement presentation, such as fair presentation, going concern assumption, accrual basis, materiality and aggregation, and offsetting. It also discusses the classification of assets and liabilities as current or non-current in the statement of financial position.

1. Conceptual
Framework &
Accounting Standards
PAS 1 Presentation of Financial Statements
Conceptual Framework & Accounting Standards
1

2. PAS 1
Presentatio
n of
Financial
Statements
Learning Objectives
• Enumerate and describe the general
features of financial statement
presentation.
• Enumerate and describe the components
of a complete set of financial statements.
• State the acceptable methods of
presenting items of income and expenses.
• Differentiate between the statement of
profit or loss and other comprehensive
income and the statement of changes in
equity.
• State the relationship of the notes with
the other components of a complete set
of financial statements.
Conceptual Framework & Accounting Standards 2

3. Objective
of PAS 1
PAS 1 prescribes the basis for
presentation of general purpose
financial statements to improve
comparability both with the
entity's financial statements of
previous periods (intra-comparability)
and with the financial statements of
other entities (inter-comparability).
Conceptual Framework & Accounting Standards 3

4. General Purpose Financial Statements
• General purpose financial statements are those
intended to serve users who do not have the authority to
demand financial reports tailored for their own needs.
General purpose financial statements cater to most of the
common needs of a wide range of external users. General
purpose financial statements are the subject matter of
the Conceptual Framework and the PFRSs.
Conceptual Framework & Accounting Standards 4

5. Complete
Set of
Financial
Statements
1. Statement of financial position
2. Statement of profit or loss and other
comprehensive income
3. Statement of changes in equity
4. Statement of cash flows
5. Notes
(5a) comparative information with respect to the
preceding period, and
6. Additional statement of financial
position (required only when certain
instances occur)
Conceptual Framework & Accounting Standards
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6. General
Features
1. Fair Presentation and Compliance with PFRSs
- The application of PFRSs, with additional
disclosure when necessary, is presumed to result in
financial statements that achieve a fair presentation.
2. Going concern - An entity is not a going concern
if, as of the financial reporting date or prior to the
date of authorization of the financial statements for
issue, management either:
a. Intends to liquidate the entity or to cease
trading or
b. Has no realistic alternative but to do so.
• The assessment of going concern is at least 12
months.
Conceptual Framework & Accounting Standards
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7. General Features (Continuation)
3. Accrual Basis of Accounting - An entity shall prepare its financial
statements, except for cash flow information, using the accrual basis of
accounting.
4. Materiality & Aggregation - Each material class of similar items must be
presented separately in the financial statements.
5. Offsetting - Assets and liabilities and income and expenses shall not be
offset unless required or permitted by a PFRS.
• Measuring assets net of valuation allowances, for example, obsolescence
allowances on inventories, allowances for doubtful accounts on receivables,
and accumulated depreciation on property, plant, and equipment are not
offsetting.
Conceptual Framework & Accounting Standards
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8. General Features (Continuation)
6. 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 the following:
1. The period covered by the financial statements,
2. The reason for using a longer or shorter period, and
3. The fact that amounts presented in the financial statements are not
entirely comparable.
Conceptual Framework & Accounting Standards
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9. General Features (Continuation)
7. Comparative Information
An entity shall present comparative information regarding the preceding
period for all amounts reported in the current period’s financial statements
unless other standards permit or require otherwise.
8. 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 that another presentation or classification would be more
appropriate following a significant change in the nature of the entity’s
operations or a review of its financial statements; or
b. a PFRS requires a change in presentation.
Conceptual Framework & Accounting Standards
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10. Additional
Statement
of
Financial
Position
• An additional statement of financial
position is presented at the beginning
of the preceding period when an
entity:
1. Applies an accounting policy retrospectively,
or
2. Makes a retrospective restatement of items
in its financial statements or
3. reclassifies items in its financial statements.
…..and the effect of the event on the
statement of financial position as at the
beginning of the preceding period is material.
Conceptual Framework & Accounting Standards 10

11. Statement of Financial Position
• A statement of financial position may be
presented as either
1. Classified – showing distinctions between
current and noncurrent assets and liabilities,
or
2. Unclassified (based on liquidity) –
showing no distinction between current and
noncurrent items
Conceptual Framework & Accounting Standards 11

12. 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 a cash equivalent unless the asset is restricted from
being exchanged or used to settle a liability for at least twelve months
after the reporting period.
Conceptual Framework & Accounting Standards
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13. 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. the entity does not have an unconditional right to defer
settlement of the liability for at least twelve months after the
reporting period.
Conceptual Framework & Accounting Standards
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14. Currently
maturing
Long-
term
Liabilities
• General rule: Currently maturing
long-term liabilities are presented
as current liabilities.
• Exceptions:
1. Refinancing agreement is fully
completed on or before the balance
sheet date – non-current liability
2. Refinancing agreement after the
balance sheet date but before the
financial statements are authorized
for issue – noncurrent liability if the
entity expects, and has the
discretion, to refinance it on a
long-term basis under an existing loan
facility.
Conceptual Framework & Accounting Standards
14

15. Breach of Loan Agreement
• General rule: A liability that is payable on demand is a
current liability.
• Exception: It is presented as a non-current liability
if the lender provides the entity, on or before the
balance sheet date, a grace period ending at least
12 months after the balance sheet date to rectify a
breach of a loan covenant.
Conceptual Framework & Accounting Standards 15

16. Presentation of Deferred taxes
• Deferred tax liabilities (assets) are
presented as noncurrent items in a
classified statement of financial
position, irrespective of their expected
dates of reversal.
Conceptual Framework & Accounting Standards 16

17. Minimum line items in the Statement Of Financial
Position
a. Property, plant, and equipment;
b. Investment property;
c. Intangible assets;
d. Financial assets (excluding amounts shown under (e), (h) and (i));
e. Investments accounted for using the equity method;
f. Biological assets;
g. Inventories;
h. Trade and other receivables;
i. Cash and cash equivalents;
j. Assets (or disposal groups) classified as held for sale in accordance with PFRS
5;
Conceptual Framework & Accounting Standards
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18. Minimum line items (Continuation)
k. Trade and other payables;
l. Provisions;
m. Financial liabilities (excluding amounts shown under (k) and (l));
n. Liabilities and assets for current tax, as defined in PAS 12 Income Taxes;
o. Deferred tax liabilities and deferred tax assets, as defined in PAS 12;
p. Liabilities included in disposal groups classified as held for sale in
accordance with PFRS 5;
q. Non-controlling interests, presented within equity; and
r. Issued capital and reserves attributable to owners of the parent
Conceptual Framework & Accounting Standards
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19. Order/ Format of Presentation
• PAS 1 does not prescribe the order or format in
which an entity presents items.
Conceptual Framework & Accounting Standards 19

20. Statement of Profit or Loss and Other
Comprehensive Income
• An entity shall present all items of income and expense
recognized in a period:
1. in a single statement of profit or loss and other comprehensive
income; or
2. in two statements: (1) a statement displaying the profit or loss
section only (separate ‘statement of profit or loss’ or ‘income
statement’) and (2) a second statement beginning with profit or
loss and displaying components of other comprehensive
income.
Conceptual Framework & Accounting Standards
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21. Extraordinary items
• PAS 1 prohibits the presentation of any
items of income or expense as extraordinary
items in the statement(s) presenting profit or
loss and other comprehensive income or in
the notes.
Conceptual Framework & Accounting Standards 21

22. Other Comprehensive Income for
the Period
a. Changes in revaluation surplus
b. Unrealized gains and losses on investments in FVOCI securities
c. Remeasurements of the net defined benefit liability (asset)
d. Gains and losses arising from translating the financial statements of a
foreign operation
e. Effective portion of gains and losses on hedging instruments in a cash
flow hedge
• OCI may be presented either (a) net of tax or (b) gross of tax.
Conceptual Framework & Accounting Standards 22

23. Reclassification adjustments
• Reclassification
adjustments are
amounts reclassified to
profit or loss in the
current period that were
recognized in other
comprehensive income in
the current or previous
periods.
Conceptual Framework & Accounting Standards 23

24. Total Comprehensive Income
• Total comprehensive income comprises all
components of
1. Profit or loss; and
2. Other comprehensive income.
Conceptual Framework & Accounting Standards 24

25. Presentation of Expenses
1. Nature of expense method
2. Function of expense method
• If an entity classifies expenses by function, it
shall disclose additional information on
the nature of expenses
Conceptual Framework & Accounting Standards 25

26. Disclosure of dividends
• Dividends declared by an entity are disclosed either
in the (a) notes or (b) statement of changes in equity.
Conceptual Framework & Accounting Standards 26

27. Order of presentation of
disclosures in the Notes
1. Statement of compliance with PFRSs;
2. Summary of significant accounting policies applied;
3. Supporting information for items presented in the
other financial statements; and
4. Other disclosures.
Conceptual Framework & Accounting Standards 27

28. APPLICATION OF
CONCEPTS
Conceptual Framework & Accounting Standards
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29. End of Presentation
Conceptual Framework & Accounting Standards 29
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you