IAS 1 provides the requirements for presenting general purpose financial statements to ensure comparability. It sets out guidelines for the structure of financial statements and minimum requirements for content. Financial statements must include a statement of financial position, statement of profit or loss and other comprehensive income, statement of changes in equity, and statement of cash flows. Notes to the financial statements must also be presented. IAS 1 specifies the components that must be presented in each financial statement and note disclosure requirements.

1. IAS 1: Presentation of Financial Statements
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2. Objectives of IAS-1
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The objective of IAS 1 is to prescribe the
basis for presentationof general purpose
financial statements, to ensure
comparability both with
a) the entity's financial statements of
previous periods and
b) with the financial statements of other
entities.

3. Objectives of IAS-1
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• IAS 1 sets out the overall requirementsfor
– the presentation of financial statements,
– guidelines for their structure and
– minimum requirements for their content.
• Standards for recognizing, measuring, and
disclosing specific transactions are
addressed in other Standards and
Interpretations.

4. Scope
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• Applies to all general purpose financial
statements based on International
Financial Reporting Standards.
• General purpose financial statements
are those intended to serve users who
are NOT in a position to requirefinancial
reports tailored to their particular
information needs.

5. Objective of Financial Statements
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• To provide information about the financial
position, financial performance, and
cash flows of an entity that is useful to a
wide range of users in making economic
decisions.

6. Objective of Financial Statements
To meet
that
objective,
financial
statements
provide
information
about an
entity's:
assets
liabilities
equity
income and
expenses,
including gains
and losses
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contributions by
and distributions
to owners
cash flows

7. Objective of Financial Statements
That information, along with other information in
the notes, assists users of financial statements
in predicting the entity's future cash flows and,
in particular, their timing and certainty.
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8. Components of Financial Statements
A complete set of financial statements should include:
1) Statement of Financial Position ”at the end of the period”,
2) Single Statement of Profit or Loss and Other Comprehensive
Income “for the period” (or two statements: Statement of
Profit and Loss and Statement of Other Comprehensive
Income),
3) Statement of changes in equity ”for the period”,
4)Statement of Cash Flows “for the period”, and
5)
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Notes, comprising a summary of accounting policies and
other explanatory notes

9. Components of Financial Statements
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An entity must also present a statement of financial
position as at the beginning of the earliest
comparative period when:
– an accounting policy is applied retrospectively; or
– items are restated retrospectively; or
– when items are reclassified

10. Components of Financial Statements
Reports that are presented
outside of the financial
statements – Including
financial reviews by
management, environmental
reports, and value added
statements – are outside the
scope of IFRSs.
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11. Presentation Requirements
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General Features
Statement of Financial Position
Statement of Profit or Loss and Other Comprehensive
income
Statement of Cash Flows
Statement of Change in Equity
Notes to The Financial Statements

12. General Features
Structure and Content of Financial Statements in General Clearly
identify:
• The financial statements must be clearly identified and
distinguished from other information in the same published
document.
• Each financial statement and the notes must be clearly identified
• In addition the following must be displayed prominently:
• name of the reporting entity;
• whether the financial statements are of an individual entity or a
group;
• reporting date;
• presentation currency (as defined in IAS 21); and
• level of rounding used (thousands, millions, etc.)
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13. General Features
Fair Presentation and Compliance with IFRSs
• The financial statements must "present fairly" the
financial position, financial performance and cash flows
of an entity.
• Fair presentation requires the faithful representation
of the effects of transactions, other events, and
conditions in accordance with the definitions and
recognition criteria for assets, liabilities, income and
expenses set out in the Framework.
• IAS 1 requires that an entity whose financial statements
comply with IFRSs make an explicit and unreserved
statement of such compliance in the notes.
• Departure from a requirement might be required
(extremely rarely).
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14. General Features
• In extremely rare cases compliance with an IFRS
requirement would be so misleading as to conflict with the
objective of financial statements set out in “The Framework”
In assessing whether conflict exists
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management must consider:
• why the objective is not achieved in the
particular circumstances; and
• how the entity’s circumstances differ from those
of other entities that comply with the
requirement

15. General Features
Fair Presentation and Compliance with IFRSs
• Inappropriate accounting policies are NOT rectified
either by
• disclosure of the accounting policies used or
• by notes or explanatory material.
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16. General Features
Going Concern
• An entity preparing IFRS financial statements
is presumed to be a going concern.
• If management has significant concerns about
the entity's ability to continue as a going
concern, the uncertainties must be disclosed.
• If management concludes that the entity is
NOT a going concern, the financialstatements
should NOT be prepared on a going concern
basis, in which case IAS 1 requires a series of
disclosures.
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17. General Features
Accrual Basis of Accounting
IAS 1 requires that an entity prepare its financial statements, except for cash
flow information, using the accrual basis of accounting.
Consistency of Presentation
The presentation and classification of items in the financial statements shall
be retained from one period to the next unless a change is justified either
by a change in circumstances or a requirement of a new IFRS.
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18. General Features
Materiality and Aggregation
• Preparation of financial statements involves processing a large
number of transactions and aggregating these into classes
according to their nature or function
• The final stage in the process is the presentation line items on the
face of the financial statements
• Guidance
• Each material class of similar items must be presented
separately
• Items of a dissimilar nature or function must be presented
separately unless they are immaterial
• If a line item is not individually material it is aggregated with other
items
• A specific disclosure requirement in IFRS need not be satisfied if
the information is not material
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19. General Features
Offsetting
• Assets and liabilities, and income and expenses,
must not be offset unless required or permitted by
IFRS
• IAS 32 (Financial Instruments: Presentation)
contains rules on the offset of financial assets and
financial liabilities which require offset when (and
only when) an entity:
• has a legal right to set off; and
• intends to settle on a net basis; or
• to realise the asset and settle the liability
simultaneously
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20. General Features
Comparative Information
• IAS 1 requires that comparative information
shall be disclosed in respect of the previous
period for all amounts reported in the
financial statements, both face of financial
statements and notes, unless another
Standard requires otherwise.
• If comparative amounts are changed or
reclassified, various disclosures are
required.
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21. General Features
• There is a presumption that financial
statements will be prepared at least
annually.
• When an entity changes the end of its
reporting period (resulting in financial
statements covering a period longer or
shorter than one year) it must disclose:
• the reason for using a longer or shorter
period, and
• the fact that amounts presented in the
financial statements are not entirely
comparable
Reporting
Period
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22. Statement of Financial Position
Only if a presentation based on liquidity provides
information that is reliable and more relevant may the
current/noncurrent split be omitted.
An entity must normally present a classified statement
of financial position, separating current and
noncurrent assets and liabilities.
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23. Statement of Financial Position
Current assets
• are cash; cash equivalent; assets held for collection,
sale, or consumption within the entity's normal
operating cycle; or assets held for trading within the
next 12 months. All other assets are noncurrent.
Current liabilities
• are those to be settled within the entity's normal
operating cycle or due within 12 months, or those
held for trading, or those for which the entity does
NOT have an unconditional right to defer payment
beyond 12 months. Other liabilities are noncurrent.
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24. When a long-term debt is
expected to be refinanced
under an Existing loan facility
and the entity has the
discretion, the debt is classified
as Non-current, even if due
within 12 months.
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Statement of Financial Position

25. • If a liability has become payable on demand because an entity
has breached an undertaking under a long-term loan agreement
on or before the reporting date, the liability is CURRENT, even if
the lender has agreed, after the reporting date and before the
authorization of the financial statements for issue, NOT to
demand payment as a consequence of the breach.
• However, the liability is classified as NON-CURRENT if the
lender agreed by the reporting date to provide a period of grace
ending at least 12 months after the end of the reporting period,
within which the entity can rectify the breach and during which
the lender cannot demand immediate repayment.
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Statement of Financial Position

26. On 3 May 2012, the (IASB) issued
amendments to IAS 1 which clarifies that
a liability is classified as NON-CURRENT
if an entity expects, and has the
discretion, to refinance or roll over the
obligation for at least 12 months after the
reporting period under an existing loan
facility with the same lender and on the
same or similar terms.
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Statement of Financial Position

27. 27
• IAS 1 does NOT prescribe the format of the Statement of
Financial Position. Assets can be presented current then
noncurrent, or vice versa, and liabilities and equity can be
presented current then noncurrent then equity, or vice
versa. A net asset presentation (assets minus liabilities) is
allowed.
• Certain items (“line items”) must be shown on the face of
the statement of financial position as a minimum:
• additional line items, headings and sub-totals are presented
when relevant to an understanding of financial position;
Statement of Financial Position

28. 28

29. Profit or Loss
for that period
Other
Comprehensive
Income
recognized in
that period.
Total Comprehensive
income for a period
Statement of Profit or Loss and
other Comprehensive Income
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30. 30
• All items of income and expense recognized in a
period must be included in profit or loss unless a
Standard or an Interpretation requires otherwise.
• Some IFRSs require or permit that some
components to be excluded from profit or loss and
instead to be included in other comprehensive
income.
Statement of Profit or Loss and
other Comprehensive Income

31. The components of other comprehensive income
include:
• Changes in revaluation surplus (IAS 16 and IAS 38)
• Actuarial gains and losses on defined benefit plans
recognized in accordance with IAS 19
• Gains and losses arising from translating the financial
statements of a foreign operation (IAS 21)
• Gains and losses on remeasuring available-for-sale financial
assets (IAS 39)
• The effective portion of gains and losses on hedging
instruments in a cash flow hedge (IAS 39).
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Statement of Profit or Loss and
other Comprehensive Income

32. An entity has a choice of presenting:
a single statement of profit or loss and
other comprehensive income or two
statements:
a statement of profit or loss
displaying components of profit
or loss and
a statement of other
comprehensive income that
begins with profit or loss and
displays components of other
comprehensive income
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Statement of Profit or Loss and
other Comprehensive Income

33. 33
• No items may be presented in the statement of profit or loss and
other comprehensive income (or in the statement of profit or
loss, if separately presented) or in the notes as ‘extraordinary
items’.
• Expenses recognized in profit or loss should be analyzed either by
nature (raw materials, staffing costs, depreciation, etc.) or by
function (cost of sales, selling, administrative, etc).
• If an entity categorizes by function, then additional information
on the nature of expenses – at a minimum depreciation,
amortization and employee benefits expense – must be disclosed.
Statement of Profit or Loss and
other Comprehensive Income

34. Revenue X
Expenses (X)
Share of profit of associate X
Profit before tax X
Income tax expense (X)
Profit from continuing ops X
Loss from discontinued ops (X)
PROFIT FOR THE YEAR X
Other comprehensive income:
AFS assets X
Revaluation (X)
OCI before tax X
Tax relating to OCI (X)
OCI after tax X
TOTAL COMPREHENSIVE INCOME X
May be two separate
statements
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Statement of Profit or Loss and
other Comprehensive Income

35. Revenue X
Expenses (X)
Share of profit of associate X
Profit before tax X
Income tax expense (X)
Profit from continuing ops X
Loss from discontinued ops (X)
PROFIT FOR THE YEAR X
Other comprehensive income:
AFS assets X
Revaluation (X)
OCI before tax X
Tax relating to OCI (X)
OCI after tax X
TOTAL COMPREHENSIVE INCOME X
These are analysed into amounts
attributable to owners of the parent
and to the NCI
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Statement of Profit or Loss and
other Comprehensive Income

36. Revenue X
Expenses (X)
Share of profit of associate X
Profit before tax X
Income tax expense (X)
Profit from continuing ops X
Loss from discontinued ops (X)
PROFIT FOR THE YEAR X
Other comprehensive income:
AFS assets X
Revaluation (X)
OCI before tax X
Tax relating to OCI (X)
OCI after tax X
TOTAL COMPREHENSIVE INCOME X
The components of OCI
could also be presented as
net of tax amounts rather
than gross with tax
deducted
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Statement of Profit or Loss and
other Comprehensive Income

37. 37

38. Statement of Changes in Equity
IAS 1 requires an entity to present a statement of changes in equity as a
separate component of the financial statements. The statement must
show:
• total comprehensive income for the period, showing separately
amounts attributable to owners of the parent and to non-controlling
interests
• the effects of retrospective application, when applicable, for each
component
• reconciliations between the carrying amounts at the beginning and the
end of the period for each component of equity, separately disclosing:
• profit or loss,
• each item of other comprehensive income, and
• transactions with owners.
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39. Sh.
cap.
Ret.
earn’s
CTD AFS CFH Total NCI Total
equity
Balance b/f X X X X X X X X
Changes in acc
policy (X) (X) (X) (X)
Restated X X X X X X X X
Changes in
equity in year:
Share issue X X
Dividends (X) (X) (X)
Total
comprehensive
income X X X X X X X
Balance c/f X X X X X X X X
Disclosed in Statement of profit or loss and other
comprehensive income
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Statement of Changes in Equity

40. • The amount of dividends recognised as
distributions to owners during the period, and
the related amount per share must be
disclosed either in the statement of changes
in equity or in the notes
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Statement of Changes in Equity

41. 41

42. Statement of Cash Flows
IAS 1 refers
to IAS 7
Statement of
Cash Flows
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43. 43

44. IAS 1 suggests that the notes should normally be presented in the
following order:
• a statement of compliance with IFRSs
• a summary of significant accounting policies applied, including:
• the measurement basis used in preparing the financial statements
• the other accounting policies used
• supporting information for items presented on the face of the statement
of financial position, statement of profit or loss and other comprehensive
income, statement of changes in equity and statement of cash flows, in
the order in which each statement and each line item is presented
• other disclosures, including:
• contingent liabilities (see IAS 37) and unrecognized contractual
commitments
• non-financial disclosures, such as the entity's financial risk management
objectives and policies (see IFRS 7)
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Notes to the Financial Statements

45. Disclosure of key sources of
estimation uncertainty.
• An entity must disclose, in the notes, information
about the key assumptions concerning the future,and
other key sources of estimation uncertainty at the
end of the reporting period, that have a significant risk
of causing a material adjustment to the carrying
amounts of assets and liabilities within the next
financial year.
• These disclosures do not involve disclosing budgets or
forecasts
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Notes to the Financial Statements

46. Disclosures about Dividends
• the amount of dividends proposed or
declared before the financial
statements were authorized for issue
but not recognized as a distribution to
owners during the period, and the
related amount per share and the
amount of any cumulative preference
dividends not recognized.
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Notes to the Financial Statements

47. •Capital Disclosures
• An entity should disclose information about its
objectives, policies and processes for managing
capital.
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Notes to the Financial Statements

48. 48

49. Case
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Business Case#1
Sony is a manufacturer of televisions. The domestic market for electronic
goods is
currently not doing well, and therefore many entities in this business are switching
to exports. As per the audited financial statements for the year ended December
31, 20X1,
the entity had net losses of BDT 2 million. At December 31, 20X1, its current assets
aggregate to BDT 20 million and the current liabilities aggregate to BDT 25 million.
Due to expected favorable changes in the government policies for the electronics
industry, the entity is projecting profits in the coming years. Furthermore, the
shareholders of the entity have arranged alternative additional sources of finance
for its expansion plans and support its working needs in the next 12 months.
Required: Should Sony prepare its financial statements under the going concern
assumption?

50. Case
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Business Case#1 Solution
The two factors that raise doubts about the entity’s ability to continue as a
going concern are
(1) The net loss for the year of BDT 2 million
(2)At the statement of financial position date, the working capital
deficiency current liabilities of BDT 25 million exceeds its current assets of
BDT 20 million by BDT 5 million
However, there are two mitigating factors:
(1) The shareholders’ ability to arrange funding for the entity’s expansion
and working capital needs
(2)Projected future profitability due to expected favorable changes in
government policies for the industry the entity is operating within