Presentation of Financial Statements - Introduction

OVERVIEW

Aim
The aim of this workbook is to assist the individual in understanding the IFRS Presentation of Financial Statements. This is the subject of IAS 1.

IAS 1 was updated in 2007. The changes are listed in the Annex to this workbook. One of the changes is the retitling of the balance sheet as the statement of financial position.

The Board decided to rename a new statement a ‘statement of comprehensive income’. The term ‘comprehensive income’ is not defined in the Framework but is used in IAS 1 to describe the change in equity of an undertaking during a period from transactions, events and circumstances other than those resulting from transactions with owners in their capacity as owners.

Although the term ‘comprehensive income’ is used to describe the aggregate of all components of comprehensive income, including profit or loss, the term ‘other comprehensive income’ refers to income and expenses that under IFRSs are included in comprehensive income but excluded from profit or loss.

The Board decided that an undertaking should have the choice of presenting all income and expenses recognised in a period in one statement or in two statements. An undertaking is prohibited from presenting components of income and expense (ie non-owner changes in equity) in the statement of changes in equity.

The Board acknowledged that the titles ‘income statement’ and ‘statement of profit or loss’ are similar in meaning and could be used interchangeably, and decided to retain the title ‘income statement’ as this is more commonly used.


This workbook is complemented by the Illustrative Corporate Financial Statements and the IFRS Disclosure Checklist which appear on the project website.