InterAcc 3 (Acctg 105)

Statement of Financial Position (Related Standard: PAS 1 Presentation of Financial Statements)

Objective of PAS 1 c. The assessment of going concern is at

PAS 1 prescribes the basis for presentation of least 12 months
general-purpose financial statements to improve 3. Accrual Basis of Accounting - An entity
comparability both with the entity's financial shall prepare its financial statements, except
statements of previous periods and with the for cash flow information, using the accrual
financial statements of other entities. basis of accounting.
4. Materiality & Aggregation - Each material
General purpose financial statements class of similar items must be presented
Those intended to serve users who do not have the separately in the financial statements.
authority to demand financial reports tailored for 5. Offsetting - Assets and liabilities, and income
their own needs. General purpose financial and expenses, shall not be offset unless
statements are those statements that cater to most required or permitted by a PFRS.
of the common needs of a wide range of external Measuring assets net of valuation
users. General purpose financial statements are the allowances, for example, obsolescence
subject matter of the Conceptual Framework and allowances on inventories, allowances for
the PFRSs doubtful accounts on receivables, and
accumulated depreciation on property, plant,
Types of comparability and equipment are not offsetting.
1. Intra-comparability 6. Frequency of reporting – An entity shall
2. Inter-comparability present a complete set of financial statements
(including comparative information) at least
Complete set of financial statements annually.
1. Statement of financial position When an entity changes the end of its
2. Statement of profit or loss and other reporting period and presents financial
comprehensive income statements for a period longer or shorter than
3. Statement of changes in equity one year, an entity shall disclose the
4. Statement of cash flows following,
5. Notes a. The period covered by the financial
(5a) comparative information in respect of the statements:
preceding period; and b. The reason for using a longer or shorter
6. A statement of financial position as at the period, and
beginning of the preceding period when an c. The fact that amounts presented in the
entity applies an accounting policy financial statements are not entirely
retrospectively or makes a retrospective comparable.
restatement of items in its financial statements, 7. Comparative Information - An entity shall
or when it reclassifies items in its financial present comparative information in respect of
statements. the preceding period for all amounts reported
in the current period’s financial statements,
General features unless other standards permit or require
1. Fair Presentation and Compliance with otherwise.
PFRSs - The application of PFRSs, with 8. Consistency of presentation - An entity shall
additional disclosure, when necessary, is retain the presentation and classification of
presumed to result in financial statements that items in the financial statements from one
achieve a fair presentation. period to the next unless:
2. Going concern- An entity is not a going a. it is apparent that another presentation or
concern if, as of financial reporting date or classification would be more appropriate
prior to the date of authorization of financial following a significant change in the
statements for issue, management either nature of the entity’s operations or a
a. Intends to liquidate the entity or to cease review of its financial statements; or
trading, or b. a PFRS requires a change in
b. Has no realistic alternative but to do so. presentation.
Additional Statement of financial position Exceptions:
A statement of financial position as at the 1. Refinancing agreement fully completed on or
beginning of the preceding period shall be before the balance sheet date – non-current
presented liability
when an entity 2. Refinancing agreement after the balance sheet
1. Applies an accounting policy retrospectively date but before the financial statements are
or authorized for issue – non-current liability if
2. Makes a retrospective restatement of items in the refinancing is at the discretion of the
its financial statements, or entity.
3. When it reclassifies items in its financial
statements. Breach of loan agreement
…..and the effect of the event to the statement of General rule: A liability that is payable on
financial position as at the beginning of the demand is a current liability.
preceding period is material. Exception: It is presented as non-current
liability if the lender provides the entity, on or
Statement of financial position before the balance sheet date, a grace period
A statement of financial position may be ending at least 12 months after the balance sheet
presented as either date to rectify a breach of loan covenant.
1. Classified (current/non-current distinction) –
showing current and noncurrent assets and Presentation of Deferred taxes
liabilities, or Deferred tax liabilities (assets) shall be presented
2. Unclassified (based on liquidity) – showing as noncurrent items in a classified statement of
no distinction between current and noncurrent financial position, irrespective of their expected
items. dates of reversal.

Current Assets Minimum line items in the statement of

An entity shall classify an asset as current financial position
when: a. Property, plant and equipment;
1. it expects to realize the asset or intends to sell b. Investment property;
or consume it, in its normal operating cycle; c. Intangible assets;
2. it holds the asset primarily for the purpose of d. Financial assets (excluding amounts shown
trading; under (e), (h) and (i));
3. it expects to realize the asset within twelve e. Investments accounted for using the equity
months after the reporting period; or method;
4. the asset is cash or a cash equivalent unless the f. Biological assets;
asset is restricted from being exchanged or g. Inventories;
used to settle a liability for at least twelve h. Trade and other receivables;
months after the reporting period. i. Cash and cash equivalents;
j. Assets classified as held for sale (Groups
Current Liabilities classified as held for sale) in accordance with
An entity shall classify a liability as current PFRS 5
when: k. Trade and other payables;
1. it expects to settle the liability in its normal l. Provisions;
operating cycle; m. Financial liabilities (excluding amounts shown
2. it holds the liability primarily for the purpose under (k) and (l));
of trading; n. Liabilities and assets for current tax, as
3. the liability is due to be settled within twelve defined in PAS 12 Income Taxes;
months after the reporting period; or o. Deferred tax liabilities and deferred tax assets,
4. the entity does not have an unconditional right as defined in PAS 12;
to defer settlement of the liability for at least p. Liabilities included in disposal groups
twelve months after the reporting period. classified as held for sale in accordance with
PFRS 5;
Currently maturing long-term liabilities q. Non-controlling interests, presented within
General rule: Currently maturing long term equity; and
liabilities are presented as current liabilities.
 r. Issued capital and reserves attributable to
owners of the parent

Order/ Format of Presentation

PAS 1 does not prescribe the order or
format in which an entity presents item.