2. TECHNICAL KNOWLEDGE
To understand the nature of interim financial reporting in contrast
to annual financial reporting
To know the basic principles of interim financial reporting
To identify the components of an interim financial reporting
To be able to prepare and present comparative interim financial
statement
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3. INTERIM FINANCIAL REPORT
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it means the preparation and presentation of financial
statements for a period of less than one year
PAS 34 prescribe the minimum content of an interim
financial report and the principles for recognition and
measurement in complete or condensed financial
statement for an interim period
INTERIM FINANCIAL REPORT MAY BE PRESENTED
MONTHLY ,QUARTERLY OR SEMI ANNUALLY
4. FREQUENCY OF FUNANCIAL REPORT
>PAS 34 DOES NOT MANDATE WHICH ENTITIES ARE
REQUIRED TO PUBLISH INTERIM FINANCIAL REPORTS, HOW
FREQUENTLY, OR HOW SOON AFTER THE END OF AN INTERIM PERIOD
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PHILIPPINE JURSIDICTION
The Securities and Exchange Commission and Philippine
Stock Exchange require entities covered by the reportorial requirements of
Revised Securities Act to file quarterly interim financial reports within 45 days
after the end of each of the first three quarters.
The SEC also requires entities covered by the Rules on Commercial Papers
and Financing Act to file quarterly financial reports within 45 days after each
quarter-end.
Entities that provide interim financial reports in conformity with Philippine
Financial Reporting Standards shall conform to the recognition, measurement
and disclosure requirements set out in the standard.
5. TWO VIEWS ON INTERIM FINANCIAL
REPORT
INTEGRAL VIEW
Each interim period is on integral part of the annual accounting period.
Under the integral view, annual reporting expenses are estimated and then
allocated to the interim period based on forecasted revenue or sales volume.
INDEPENDENT VIEW
Each interim period is considered a discrete or separate accounting period with status
equal to a fiscal year.
Thus, no estimations or allocations are made for interim purposes, unless such
estimations or allocations are allowed for annual reporting. The same expense
recognition rules shall apply as under annual reporting and no special interim accruals
or deferrals are permitted
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6. COMPONENTS OF FINANCIAL REPORT
1. CONDENSES STATEMENT OF FINANCIAL POSITION
2. CONDENSED STATEMENT OF COMPREHENSIVE INCOME
3. CONDENSED STATEMENT OF CHANGES IN EQUITY
4. CONDENSED STATEMENT OF CASH FLOW
5. SELECTED EXPLANATORY NOTES
Paragraph 8A provides that an entity can present items of profit or loss in a
separate condensed income statement.
Nothing in the standard is intended to prohibit or discourage an entity from
publishing a complete set of financial statements, rather than condensed
financial statements and selected explanatory notes.
In other words, PAS 34 allows an entity to publish a set of condensed
financial statements or complete set of financial statements in the interim
financial report.
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7. SELECTED EXPLANATORY NOTES
The selected explanatory notes are designed to provide an explanation of significant events and transactions
arising since the last annual financial statements.
PAS 34 assumes that financial statement users have an access to the entity's most recent annual report.
As a result, the standard reiterates that it is a superfluity to provide the same notes in the interim financial report
that appeared in the most recent annual financial report.
a. Writedown of inventories to net realizable value and the reversal of such a writedown
b. Recognition of a loss from the impairment of property, plant and equipment and intangible assets and the reversal of such an
impairment loss
c. The reversal of any provisions for the costs of restructuring
d. Acquisitions and disposal of items of property, plant and equipment
e. Commitments for the purchase of property, plant and equipment
f. Litigation settlements
g. Corrections of prior period errors in previously reported financial data
h. Any debt default or any breach of a debt covenant that has not been corrected subsequently
i. Related party transactions
j. Changes in economic circumstances that affect fair value of financial asset and financial liability
k. Change in the classification of financial asset
L. Contingent liabilities and contingent assets
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8. PRESENTATION OF COMPARATIVE INTERIM
STATEMENT
1. Statement of financial position
a. Statement of financial position at the end of current interim period
b. Comparative statement of financial position at the end of preceding year.
2. Income statement
a. Income statement for the current interim period
b. Income statement cumulatively for the current financial year to date
c. Comparative income statement for the comparable interim period of the preceding year
d. Comparative income statement cumulatively for the comparable financial year to date of the preceding year
3. Statement of comprehensive income
a Statement of comprehensive income for the current interim period
b.Statement of comprehensive income cumulatively for the current financial year to date
c. Comparative statement of comprehensive income for the comparable interim period of the preceding year
d. Comparative statement of comprehensive income cumulatively for the comparable financial year to date of the preceding year
4. Statement of changes in equity
a. Statement of changes in equity cumulatively for the current financial year to date
b. Comparative statement of changes in equity for the comparable financial year to date of the preceding year
5. Statement of cash flows
a. Statement of cash flows cumulatively for the current financial year to date
b. Comparative statement of cash flows for the comparable financial year to date of the preceding year.
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9. ILLUSTRATION – HALF YEARLY
If an entity publishes interim financial reports half-yearly, the following comparative financial
statements are presented on June 30, 2020:
Statement of financial position: On
June 30, 2020 December 31, 2019
Statement of comprehensive income: 6 months ending
June 30, 2020 June 30, 2019
Statement of cash flows: 6 months ending
June 30, 2020 June 30, 2019
Statement of changes in equity: 6 months ending
June 30, 2020 June 30, 2019
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10. ILLUSTRATION – QUARTERLY
If an entity publishes interim financial reports quarterly, the following comparative financial statements are
included in the quarterly interim financial report on June 30, 2020:
Statement of financial position: On
June 30, 2020 December 31, 2019
Statement of comprehensive income:
June 30, 2020 June 30, 2019
3 months ending 6 months ending
June 30, 2020 June 30, 2019
Statement of cash flows: 6 months ending
June 30, 2020 June 30, 2019
Statement of changes in equity: 6 months ending
June 30, 2020 June 30, 2019
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11. INVENTORIES
Paragraph 25 of Appendix B of PAS 34 provides that inventories are measured
for interim financial reporting by the same principles as at financial year-end.
This simply means that inventories shall be measured at the lower of cost or net
realizable value even for interim purposes.
The cost of the inventory may be estimated using the gross profit method or
retail inventory method.
Full inventory and valuation procedures are not required for inventories at
interim date.
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12. RECOGNITION OF BONUS
A bonus is antitipated for interim purposes if and only if
a. The bonus is a legal obligation or past practice would maks the bonus a constructive
obligation for which the entity has no realistic alternative but to make the payment
b. A reliable estimate of the obligation can be made.
IRREGULAR COST
Certain costs are expected to be incurred irregularly during the financial year, such as charitable
contribution employee training cost. And
Such costs are generally discretionary and even though they are planned shall not be
anticipated as of an interim date simply because the costs have not yet been incurred.
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Depreciation and amortization
Depreciation and amortization for an interim period shall be based only on assets owned during
that interim period.
Asset acquisitions or dispositions planned for later in the financial year shall not be taken into
account
Paid vacation and holiday leave
Paid vacation and holiday leave shall be accrued for interim purposes because these are
enforceable as legal commitments.
Gain and loss
Gain or loss from disposal of property, gain or loss from discontinued operation and other gain
or loss shall not be allocated over the interim periods.
The gain is reported in the interim period when realized and the loss is reported in the interim
period when incurred
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14. ----------------------------------------
INCOME TAX
Interim period income tax expense shall reflect the same general
principles of income tax accounting applicable to annual reporting.
Paragraph 12 of Appendix B of PAS 34 states that the interim
period income tax expense is accrued using the annual effective
income tax rate applied to the pretax income of the interim period
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