3 PAS1 - Presentation of FS

• Presentation of Financial Statements (PAS 1)

  Prescribe the basis for presentation of general purpose financial statements, to ensure comparability both with the entity's financial statements of previous periods and with the financial statements of other entities
• Objectives of PAS 1


  • Prescribe the overall framework and responsibilities for the presentation of financial statements
  • Provide guidelines for their structure and minimum requirements for the content of the financial statements
  • Standards for recognizing, measuring, and disclosing specific transactions are addressed in other Standards and Interpretations
• Information provided by financial statements

  • Assets
  • Liabilities
  • Equity
  • Income and expenses, including gains and losses
  • Other changes in equity
  • Cash flows
• Components of a complete set of financial statements

  • A statement of financial position as at the end of the period
  • A statement of comprehensive income for the period
  • A statement of changes in equity for the period
  • A statement of cash flows for the period
  • Notes, comprising a summary of significant accounting policies and other explanatory information
  • A statement of financial position as at the beginning of the earliest comparative period when an entity applies an accounting policy retrospectively or makes a retrospective restatement of items in its financial statements, or when it reclassifies items in its financial statements
• Fair Presentation and Compliance with PFRSs

  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. The application of PFRSs, with additional disclosure when necessary, is presumed to result in financial statements that achieve a fair presentation.
• PAS 1 requires that an entity whose financial statements comply with PFRSs make an explicit and unreserved statement of such compliance in the notes. Financial statements shall not be described as complying with PFRSs unless they comply with all the requirements of PFRSs.
• Inappropriate accounting policies are not rectified either by disclosure of the accounting policies used or by notes or explanatory material.
• Going Concern


  An entity preparing PFRS 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 financial statements should not be prepared on a going concern basis, in which case PAS 1 requires a series of disclosures.
• PAS 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 PFRS.
• Materiality and Aggregation


  Each material class of similar items must be presented separately in the financial statements. Dissimilar items may be aggregated only if they are individually immaterial.
• Assets and liabilities, and income and expenses, may not be offset unless required or permitted by a Standard or an Interpretation.
• PAS 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.
• There is a presumption that financial statements will be prepared at least annually. If the annual reporting period changes and financial statements are prepared for a different period, the enterprise must disclose the reason for the change and a warning about problems of comparability.
• Current/Noncurrent Distinction


  An entity must normally present a classified statement of financial position, separating current and noncurrent assets and liabilities. Only if a presentation based on liquidity provides information that is reliable and more relevant may the current/noncurrent split be omitted.
• Criteria for classifying an asset as current

  • It expects to realize the asset, or intends to sell or consume it, in its normal operating cycle
  • It holds the asset primarily for the purpose of trading
  • It expects to realize the asset within twelve months after the reporting period
  • The asset is cash or a cash equivalent (as defined in IAS 7) unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
• An entity shall classify all other assets as non-current.
• Criteria for classifying a liability as current

  • It expects to settle the liability in its normal operating cycle
  • It holds the liability primarily for the purpose of trading
  • The liability is due to be settled within twelve months after the reporting period
  • The entity does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period
• An entity shall classify all other liabilities as non-current.
• Issues on Refinancing


  • An entity classifies its financial liabilities as current when they are due to be settled within twelve months after the end of the reporting period, even if the original term was for a period longer than twelve months and the intention is supported by an agreement to refinance, or reschedule the payments, on a long-term basis is completed after the end of the reporting period and completed before the financial statements are authorized for issue.
  • If the entity has the discretion to refinance, or to roll over the obligation for at least twelve months after the end of the reporting period under an existing loan facility, it classifies the obligation as non-current, even if it would be due with in a shorter period.
• Breach of a Loan Covenant

  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 end of the reporting period, the liability is current, even if the lender has agreed, after the end of the reporting period 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 end of the reporting period 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.
• Components of Comprehensive Income

  • Profit and Loss - Income minus Expenses including Tax expense and any Income or Loss from Discontinued Operations
  • Other Comprehensive income – Items of income and expenses including reclassification adjustments (RA) that are not included in Profit and Loss as required by a standard or interpretation. There are two types of OCI items, those that are reclassified to profit or loss (RA) and those that are reclassified to Retained Earnings (RE).
• OCI items


  • Unrealized gain or loss on equity investments measured at FVOCI (RE)
  • Unrealized gain or loss on debt investments measured at FVOCI (RA)
  • Unrealized gain or loss from derivative contracts designated as cash flow hedge (RA)
  • Revaluation Surplus (RE)
  • Remeasurement Gains and losses for defined benefit plans (RE)
  • Change in fair value arising from credit risk for financial liabilities measured at FVPL (RE)
  • Translation gains and losses of foreign operations
• Minimum line items to be presented in the statement of comprehensive income


  • Revenue
  • Finance costs
  • Share of the profit or loss of associates and joint ventures accounted for using the equity method
  • Tax expense
  • A single amount comprising the total of the post-tax profit or loss of discontinued operations and the post-tax gain or loss recognised on the measurement to fair value less costs to sell or on the disposal of the assets or disposal group(s) constituting the discontinued operation
  • Profit or loss
  • Each component of other comprehensive income classified by nature
  • Share of the other comprehensive income of associates and joint ventures accounted for using the equity method
  • Total comprehensive income
• Allocations of profit or loss and total comprehensive income to be disclosed

  • Profit or loss for the period attributable to minority interest and owners of the parent
  • Total comprehensive income for the period attributable to minority interest and owners of the parent
• Expense presentation methods


  • Nature of expense method – Expenses are aggregated in the income statement according to their nature and are not reallocated among various functions within the entity
  • Function of expense or cost of sales method – Classifies expenses according to their function as part of cost of sales or, for example, the cost of distribution or administrative activities
• An entity shall not present any items of income and expense as extraordinary items, either on the face of the income statement or in the notes
• Information to be presented in the statement of changes in equity

  • Total comprehensive income for the period, showing separately the total amounts attributable to owners of the parent and to minority interest
  • For each component of equity, the effects of retrospective application or retrospective restatement recognized in accordance with PAS 8
  • The amounts of transactions with owners in their capacity as owners, showing separately contributions by and distributions to owners
  • For each component of equity, reconciliation between the carrying amount at the beginning and the end of the period, separately disclosing each change
• An entity shall present, either in the statement of changes in equity or in the notes, the amount of dividends recognized as distributions to owners during the period, and the related amount per share.
• Purpose of the statement of cash flows


  Cash flow information provides users of financial statements with a basis to assess the ability of the entity to generate cash and cash equivalents and the needs of the entity to utilize those cash flows.
• Requirements for the notes to the financial statements

  • Present information about the basis of preparation of the financial statements and the specific accounting policies used
  • Disclose any information required by PFRSs that is not presented on the face of the statement of financial position, income statement, statement of changes in equity, or statement of cash flows
  • Provide additional information that is not presented on the face of the statement of financial position, income statement, statement of changes in equity, or statement of cash flows that is deemed relevant to an understanding of any of them
• Notes should be cross-referenced from the face of the financial statements to the relevant note.
• Order of presentation for the notes

  • A statement of compliance with PFRSs
  • A summary of significant accounting policies applied, including the measurement basis used and other relevant accounting policies
  • Supporting information for items presented on the face of the financial statements, in the order in which each statement and each line item is presented
  • Other disclosures, including contingent liabilities, unrecognized contractual commitments, and non-financial disclosures such as the entity's financial risk management objectives and policies
• An entity must disclose, in the summary of significant accounting policies or other notes, the judgments, apart from those involving estimations, that management has made in the process of applying the entity's accounting policies that have the most significant effect on the amounts recognized in the financial statements.