FinanceFinancial AccountingIASIFRS

IAS – 01 Presentation of Financial Statements

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Financialย Statements:


The purpose of financial statement is to provide information about financial position, financial performance and cash flow of the entity that is useful for the users to make economics decisions.


A complete set of financial statements includes;

  • Statement of financial position
  • Statement of comprehensive income
  • Statement of changes in equity
  • Statement of cash flows
  • Notes to financial statement
  1. Statement of financial position: This statement is also called Balance sheet. IAS-1 required classified financial position where current assets and liabilities are separated from non-current assets and liabilities. Current portion is expected to be recovered or settled within 12 months.
  2. Statement of comprehensive income: The statement of comprehensive income includes two elements;
    1. Profit or Loss: includes all items of income and expenses.
    2. Other Comprehensive income: includes items recognized directly equity or reserves for example changes in revaluation surplus.

An entity has a choice to include all income and expenses in a single statement in Profit or loss or in a two statement profit or loss as well as other comprehensive income.

  1. Statement of Change in Equity: The statement of change in equity includes;
  2. Total comprehensive income for the period, showing separately attributable to owners and non-controlling interests.
  3. The effect of retrospective application or restatement of each component.
  • Reconciliation between the carrying amount at the beginning and end of the period of each component.
  1. Analysis of each item of other comprehensive income.
  2. Statement of Cash flow: The statement of cash flow summarizes the amount of cash and cash equivalents entering and leaving a company. Cash flow includes the following main components;
  3. Cash flow from operating activities
  4. Cash flow from investing activities
  • Cash flow from financing activities
  1. Notes to financial statement: The notes to financial statement includes;
  2. Disclosure of significant accounting policies, estimates, assumptions and judgments
  3. Additional information useful to the users understanding.
  • Statements of compliance with IFRS
  1. Summary of other explanatory information

Overall Considerations:

  1. Fair presentation and compliance with IFRS: Financial statements are required to be presented fairly as set out in the framework and accordance with IFRS and comply with all requirements of IFRS.
  2. Going Concern: IAS-1 require that financial statement is prepared on going concern basis. If management concludes that entity is not a going concern basis then financial statements should not be prepared on going concern basis.
  3. Accrual basis of accounting: IAS-1 requires that entity prepare its financial statement on accrual basis except cash flow statement.
  4. Consistency of presentation: Entity is required to retain consistency of presentation from one period to next.
  5. Materiality and aggregation: Each material class of similar items must be presented separately in financial statements. Items of dissimilar are aggregated only if they are individually immaterial.
  6. Offsetting: Offsetting of assets and liabilities or income and expenses is not permitted unless required by other IFRS.
  7. Comparative information: IAS-1 require at least one year comparative information unless required by other standard.

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