International Accounting Standard 1
Presentation of Financial Statements
In April 2001 the International Accounting Standards Board (IASB) adopted IAS 1 Presentation of Financial Statements, which had originally been issued by the International Accounting Standards Committee in September 1997. IAS 1 Presentation of Financial Statements replaced IAS 1 Disclosure of Accounting Policies (issued in 1975), IAS 5 Information to be Disclosed in Financial Statements (originally approved in 1977) and IAS 13 Presentation of Current Assets and Current Liabilities (approved in 1979).
In December 2003 the IASB issued a revised IAS 1 as part of its initial agenda of technical
projects. The IASB issued an amended IAS 1 in September 2007, which included an amendment to the presentation of owner changes in equity and comprehensive income and a change in terminology in the titles of financial statements. In June 2011 the IASB amended IAS 1 to improve how items of other income comprehensive income should be presented.
Other IFRSs have made minor consequential amendments to IAS 1. They include Improvement to IFRSs (issued April 2009), IFRS 9 Financial Instruments (issued November 2009 and October 2010), Improvement to IFRSs (issued May 2010), IFRS 10 Consolidated Financial Statements (issued May 2011), IFRS 12 Disclosures of Interests in Other Entities (issued May 2011), IFRS 13 Fair Value Measurement (issued May 2011), IAS 19 Employee Benefits (issued June 2011), Annual Improvements to IFRSs 2009-2011 Cycle (issued May 2012) and IFRS 9 Financial Instruments (Hedge Accounting and amendments to IFRS 9, IFRS 7 and IAS 39) (issued November 2013).
CONTENTS
INTRODUCTION
INTERNATIONAL ACCOUNTING STANDARD 1
PRESENTATION OF FINANCIAL STATEMENTS
OBJECTIVE
SCOPE
DEFINITIONS
FINANCIAL STATEMENTS
Purpose of financial statements
Complete set of financial statements
General features
Fair presentation and compliance with IFRSs
Going concern
Accrual basis of accounting Materiality and aggregation
Offsetting
Frequency of reporting
Comparative information
Consistency of presentation
STRUCTURE AND CONTENT
Introduction
Identification of the financial statements
Statement of financial position
Information to be presented in the statement of financial position
Current/non-current distinction
Current assets
Current liabilities
Information to be presented either in the statement of financial position or in
the notes
Statement profit or loss and other comprehensive income
Information to be presented in the profit or loss section or the statement of
profit or loss
Information to be presented in the other comprehensive income section
Profit or loss for the period
Other comprehensive income for the period
Information to be presented in the statement(s) of profit or loss and other
comprehensive income or in the notes
Statement of changes in equity
Information to be presented in the statement of changes in equity
Information to be presented in the statement of changes in equity or in the
notes
Statement of cash flows
Structure
Disclosure of accounting policies Sources of estimation uncertainty
Capital
Puttable financial instruments classified as equity
Other disclosures
TRANSITION AND EFFECTIVE DATE
WITHDRAWAL OF IAS 1 (REVISED 2003)
APPENDIX
Amendments to other pronouncements
FOR THE ACCOMPANYING DOCUMENTS LISTED BELOW, SEE PART B OF THIS
EDITION
APPROVAL BY THE BOARD OF IAS 1 ISSUED IN SEPTEMBER 2007
APPROVAL BY THE BOARD OF AMENDMENTS TO IAS 1:
Puttable Financial Instruments and Obligations Arising on Liquidation
(Amendments to IAS 32 and IAS 1) issued in February 2008
Presentation of Items of Other Comprehensive Income (Amendments to
IAS 1) issued in June 2011
BASIS FOR CONCLUSIONS
APPENDIX
Amendments to the Basis for Conclusions on other IFRSs
DISSENTING OPINIONS
IMPLEMENTATION GUIDANCE
APPENDIX
Amendments to guidance on other IFRSs
TABLE OF CONCORDANCE
International Accounting Standard 1 Presentation of Financial Statements (IAS 1) is set out in paragraphs 1-140 and the Appendix. All the paragraphs have equal authority. IAS 1
should be read in the context of its objective and the Basis for Conclusions, the Preface to International Financial Reporting Standards and the Conceptual Framework for Financial Reporting. IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors provides a basis for selecting and applying accounting policies in the absence of explicit guidance.
International
International Accounting Standard 1 Presentation of Financial Statements (IAS 1) replaces IAS 1 Presentation of Financial Statements (revised in 2003) as amended in 2005. IAS 1 sets overall requirements for the presentation of financial statements, guidelines for their structure and minimum requirements for their content.
Reasons for revising IAS 1
The main objective of the International Accounting Standards Board in revising IAS 1 was to aggregate information in the financial statements on the basis of shared characteristics. With this in mind, the Board considered it useful to separate changes in equity (net assets) of an entity during a period arising from transactions with owners in their capacity as owners from other changes in equity. Consequently, the Board decided that all owner changes in equity should be presented in the statement of changes in equity, separately from non-owner changes in equity.
In its review, the Board also considered FASB Statement No. 130 Reporting Comprehensive Income (SFAS 130) issued in 1997. The requirements in IAS 1 regarding the presentation of the statement of comprehensive income are similar to those in SFAS 130; however, some differences remain and those are identified in paragraph BC106 of the Basis for Conclusions.
In addition, the Board's intention in revising IAS 1 was to improve and reorder sections of IAS 1 to make it easier to read. The Board's objective was not to reconsider all the requirements of IAS 1.
IAS 1 affects the presentation of owner changes in equity and of comprehensive income. It does not change the recognition, measurement or disclosure of specific transactions and other events required by other IFRSs.
IAS 1 requires an entity to present, in a statement of changes in equity, all owner changes in equity. All non-owner changes in equity (ie comprehensive income) are required to be presented in one statement of comprehensive income or in two statements (a separate income statement and a statement of comprehensive income). Components of comprehensive income are not permitted to be presented in the statement of changes in equity.
IAS 1 requires an entity to present a statement of financial position as at thebeginning of the earliest comparative period in a complete set of financial statements when the entity applies an accounting policy retrospectively or makes a retrospective restatement, as defined in IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, or when the entity reclassifies items in the financial statements.
IAS 1 requires an entity to disclose reclassification adjustments and income tax relating to each component of other comprehensive income. Reclassification
adjustments are the amounts reclassified to profit or loss in the current period that were previously recognised in other comprehensive income.
IAS 1 requires the presentation of dividends recognised as distributions to owners and related amounts per share in the statement of changes in equity or in the notes. Dividends are distributions to owners in their capacity as owners and the statement of changes in equity presents all owner changes in equity.
Changes from previous requirements
The main changes from the previous version of IAS 1 are described below.
A complete set of financial statements
The previous version of IAS 1 used the titles 'balance sheet' and 'cash flow
statement' to describe two of the statements within a complete set of financial statements. IAS 1 uses 'statement of financial position' and 'statement of cash flows' for those statements. The new titles reflect more closely the function of those statements, as described in the Framework1 (see paragraphs BC14-BC21 of
the Basis for Conclusions).
IAS 1 requires an entity to disclose comparative information in respect of the previous period, ie to disclose as a minimum two of each of the statements and related notes. It introduces a requirement to include in a complete set of financial statements a statement of financial position as at the beginning of the earliest comparative period whenever the entity retrospectively applies an accounting policy or makes a retrospective restatement of items in its financial statements, or when it reclassifies items in its financial statements. The purpose is to provide information that is useful in analysing an entity's financial statements (see paragraphs BC31 and BC32 of the Basis for Conclusions).
Reporting owner changes in equity and comprehensive
income
The previous version of IAS 1 required the presentation of an income statement
that included items of income and expense recognised in profit or loss. It required items of income and expense not recognised in profit or loss to be presented in the statement of changes in equity, together with owner changes in equity. It also labelled the statement of changes in equity comprising profit or loss, other items of income and expense and the effects of changes in accounting policies and correction of errors as 'statement of recognised income and
expense'. IAS 1 now requires:
all changes in equity arising from transactions with owners in their
capacity as owners (ie owner changes in equity) to be presented separately from non-owner changes in equity. An entity is not permitted to present components of comprehensive income (ie non-owner changes in equity) in the statement of changes in equity. The purpose is to provide better information by aggregating items with shared
1 The reference to the Framework is to IASC's Framework for the Preparation and Presentation of Financial
Statements, adopted by the IASB in 2001. In September 2010 the IASB replaced the Framework with the Conceptual Framework for Financial Reporting.
characteristics and separating items with different characteristics (see paragraphs BC37 and BC38 of the Basis for Conclusions).
income and expenses to be presented in one statement (a statement of
comprehensive income) or in two statements (a separate income statement and a statement of comprehensive income), separately from owner changes in equity (see paragraphs BC49-BC54 of the Basis for Conclusions).
components of other comprehensive income to be displayed in the statement of comprehensive income.
total comprehensive income to be presented in the financial statements.
Other comprehensive income—reclassification
adjustments and related tax effects
IAS 1 requires an entity to disclose income tax relating to each component of
other comprehensive income. The previous version of IAS 1 did not include such a requirement. The purpose is to provide users with tax information relating to these components because the components often have tax rates different from those applied to profit or loss (see paragraphs BC65-BC68 of the Basis for Conclusions).
IAS 1 also requires an entity to disclose reclassification adjustments relating to components of other comprehensive income. Reclassification adjustments are amounts reclassified to profit or loss in the current period that were recognised in other comprehensive income in previous periods. The purpose is to provide users with information to assess the effect of such reclassifications on profit or loss (see paragraphs BC69-BC73 of the Basis for Conclusions).
Presentation of dividends
The previous version of IAS 1 permitted disclosure of the amount of dividends
recognised as distributions to equity holders (now referred to as 'owners') and the related amount per share in the income statement, in the statement of changes in equity or in the notes. IAS 1 requires dividends recognised as distributions to owners and related amounts per share to be presented in the statement of changes in equity or in the notes. The presentation of such disclosures in the statement of comprehensive income is not permitted (see paragraph BC75 of the Basis for Conclusions). The purpose is to ensure that owner changes in equity (in this case, distributions to owners in the form of dividends) are presented separately from non-owner changes in equity (presented in the statement of comprehensive income).
Presentation of items of other comprehensive income
In June 2011 the Board issued Presentation of Items of Other Comprehensive Income
(Amendments to IAS 1). The amendments improved the consistency and clarity of the presentation of items of other comprehensive income (OCI). The amendments also highlighted the importance that the Board places on presenting profit or loss and OCI together and with equal prominence. As explained in paragraph IN13, in 2007 IAS 1 was amended to require profit or loss
and OCI to be presented together. The amendments issued in June 2011 retained that requirement, but focused on improving how items of OCI are presented.
The main change resulting from the amendments was a requirement for entities to group items presented in OCI on the basis of whether they are potentially reclassifiable to profit or loss subsequently (reclassification adjustments). The amendments did not address which items are presented in OCI.
The amendments did not change the option to present items of OCI either before tax or net of tax. However, if the items are presented before tax then the tax related to each of the two groups of OCI items (those that might be reclassified and those that will not be reclassified) must be shown separately.
International Accounting Standard 1 Presentation of Financial Statements
Scope
This Standard prescribes 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. It sets out overall requirements for the presentation of financial statements, guidelines for their structure and minimum requirements for their content.
An entity shall apply this Standard in preparing and presenting general purpose financial statements in accordance with International Financial Reporting Standards (IFRSs).
Other IFRSs set out the recognition, measurement and disclosure requirements for specific transactions and other events.
This Standard does not apply to the structure and content of condensed interim financial statements prepared in accordance with IAS 34 Interim Financial Reporting. However, paragraphs 15-35 apply to such financial statements. This Standard applies equally to all entities, including those that present
consolidated financial statements in accordance with IFRS 10 Consolidated Financial Statements and those that present separate financial statements in accordance with IAS 27 Separate Financial Statements.
This Standard uses terminology that is suitable for profit-oriented entities, including public sector business entities. If entities with not-for-profit activities in the private sector or the public sector apply this Standard, they may need to amend the descriptions used for particular line items in the financial statements and for the financial statements themselves.
Similarly, entities that do not have equity as defined in IAS 32 Financial Instruments: Presentation (eg some mutual funds) and entities whose share capital is not equity (eg some co-operative entities) may need to adapt the financial statement presentation of members' or unitholders' interests.
Definitions
7 The following terms are used in this Standard with the meanings
specified:
General purpose financial statements (referred to as 'financial
statements') are those intended to meet the needs of users who are not in a position to require an entity to prepare reports tailored to their particular information needs.
Impracticable Applying a requirement is impracticable when the entity
cannot apply it after making every reasonable effort to do so.
International Financial Reporting Standards (IFRSs) are Standards and Interpretations issued by the International Accounting Standards Board
(IASB). They comprise:
(a) International Financial Reporting Standards;
(b) International Accounting Standards;
(c) IFRIC Interpretations; and
(d) SIC Interpretations.2
Material Omissions or misstatements of items are material if they could, individually or collectively, influence the economic decisions that users make on the basis of the financial statements. Materiality depends on the size and nature of the omission or misstatement judged in the surrounding circumstances. The size or nature of the item, or a combination of both, could be the determining factor.
Assessing whether an omission or misstatement could influence economic decisions of users, and so be material, requires consideration of the characteristics of those users. The Framework for the Preparation and Presentation of Financial Statements states in paragraph 253 that 'users are assumed to have a reasonable knowledge of business and economic activities and accounting and a willingness to study the information with reasonable diligence.' Therefore, the assessment needs to take into account how users with such attributes could reasonably be expected to be influenced in making economic decisions.
Notes contain information in addition to that presented in the statement of financial position, statement(s) of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows. Notes provide narrative descriptions or disaggregations of items presented in those statements and information about items that do not qualify for recognition in those statements.
Other comprehensive income comprises items of income and expense (including reclassification adjustments) that are not recognised in profit or loss as required or permitted by other IFRSs.
The components of other comprehensive income include:
changes in revaluation surplus (see IAS 16 Property, Plant and Equipment
and IAS 38 Intangible Assets);
remeasurements of defined benefit plans (see IAS 19 Employee Benefits);
gains and losses arising from translating the financial statements of a
foreign operation (see IAS 21 The Effects of Changes in Foreign Exchange Rates);
gains and losses from investments in equity instruments measured at
fair value through other comprehensive income in accordance with
paragraph 5.7.5 of IFRS 9 Financial Instruments;
2 Definition of IFRSs amended after the name changes introduced by the revised Constitution of the
IFRS Foundation in 2010.
3 In September 2010 the IASB replaced the Framework with the Conceptual Framework for Financial
Reporting. Paragraph 25 was superseded by Chapter 3 of the Conceptual Framework.
the effective portion of gains and losses on hedging instruments in a cash flow hedge and the gains and losses on hedging instruments that hedge investments in equity instruments measured at fair value through other comprehensive income in accordance with paragraph 5.7.5 of IFRS
9 (see Chapter 6 of IFRS 9);
for particular liabilities designated as at fair value through profit or loss, the amount of the change in fair value that is attributable to changes in
the liability's credit risk (see paragraph 5.7.7 of IFRS 9);
changes in the value of the time value of options when separating the intrinsic value and time value of an option contract and designating as the hedging instrument only the changes in the intrinsic value
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