cfas

CONCEPTUAL
FRAMEWORK
&
ACCOUNTING
STANDARDS
PAS 1: PRESENTATION OF
FINANCIAL STATEMENTS
PAS 1 Presentation of
Financial Statements
Learning Objectives
1. Enumerate and describe the general features of financial statement
presentation.
2. Enumerate and describe the components of a complete set of financial
statements.
3. State the acceptable methods of presenting items of income and
expenses.
4. Differentiate between the statement of profit or loss and other
comprehensive income and the statement of changes in equity.
5. State the relationship of the notes with the other components of a
complete set of financial statements.
Objective of PAS 1
PAS 1 prescribes the basis for presentation
of general purpose financial
statements to improve comparability
both with the entity's financial statements
of previous periods (intra-comparability)
and with the financial statements of other
entities (inter-comparability).
General purpose financial
statements
General purpose financial statements are
those intended to serve users who do not have
the authority to demand financial reports tailored
for their own needs. General purpose financial
statements cater to most of the common needs
of a wide range of external users. General
purpose financial statements are the subject
matter of the Conceptual Framework and the
PFRS.
Complete set of financial
statements
1. Statement of financial position
2. Statement of profit or loss and other comprehensive income
3. Statement of changes in equity
4. Statement of cash flows
5. Notes
(5a) comparative information in respect of the preceding
period; and
6. Additional statement of financial position (required only when
certain instances occur)
General features
1. Fair Presentation and Compliance with PFRSs - The
application of PFRSs, with additional disclosure when necessary, is
presumed to result in financial statements that achieve a fair
presentation.
2. Going concern - An entity is not a going concern if, as of the

financial reporting date or prior to the date of authorization of the
financial statements for issue, management either:
a. Intends to liquidate the entity or to cease trading, or
b. Has no realistic alternative but to do so.
The assessment of going concern is at least 12 months.
General features
3. Accrual Basis of Accounting - An entity shall prepare its financial
statements, except for cash flow information, using the accrual basis of
accounting.
4. Materiality & Aggregation - Each material class of similar items must be

presented separately in the financial statements.
5. Offsetting - Assets and liabilities, and income and expenses, shall not be
offset unless required or permitted by a PFRS.
Measuring assets net of valuation allowances, for example, obsolescence
allowances on inventories, allowances for doubtful accounts on receivables, and
accumulated depreciation on property, plant, and equipment are not offsetting.
General features
6. Frequency of reporting – An entity shall present a complete
set of financial statements (including comparative information) at
least annually.
When an entity changes the end of its reporting period and
presents financial statements for a period longer or shorter than
one year, an entity shall disclose the following:
1. The period covered by the financial statements,
2. The reason for using a longer or shorter period, and
3. The fact that amounts presented in the financial statements are not entirely
comparable.
General features
7. Comparative Information
An entity shall present comparative information in respect of the preceding
period for all amounts reported in the current period’s financial statements,
unless other standards permit or require otherwise.
8. Consistency of presentation - An entity shall retain the presentation

and classification of items in the financial statements from one period to the
next unless:
a. it is apparent that another presentation or classification would be more
appropriate following a significant change in the nature of the entity’s
operations or a review of its financial statements; or
b. a PFRS requires a change in presentation.
Additional Statement of
financial position
An additional statement of financial position is
presented as at the beginning of the preceding period
when an entity:
1. Applies an accounting policy retrospectively, or
2. Makes a retrospective restatement of items in its financial
statements, or
3. reclassifies items in its financial statements.
…..and the effect of the event to the statement of financial

position as at the beginning of the preceding period is material.
Statement of financial
position
A statement of financial position may be presented as either
1.Classified – showing distinctions between current and
noncurrent assets and liabilities, or
2.Unclassified (based on liquidity) – showing no distinction
between current and noncurrent items
Current Assets
An entity shall classify an asset as current when:
1.it expects to realize the asset or intends to sell or
consume it, in its normal operating cycle;
2.it holds the asset primarily for the purpose of trading;
3.it expects to realize the asset within twelve months after
the reporting period; or
4.the asset is cash or a cash equivalent unless the asset is
restricted from being exchanged or used to settle a
liability for at least twelve months after the reporting
period.
Current Liabilities
An entity shall classify a liability as current when:
1.it expects to settle the liability in its normal operating
cycle;
2.it holds the liability primarily for the purpose of trading;
3.the liability is due to be settled within twelve months
after the reporting period; or
4.the entity does not have the right at the end of the
reporting period to defer settlement of the liability for
at least twelve months after the reporting period.
Currently maturing long-
term liabilities
General rule: Currently maturing long term liabilities are
presented as current liabilities.
Exception: The entity has the right, at the end of the
reporting period, to roll over the obligation for at least
twelve months after the reporting period under an
existing loan facility – non-current liability
Statement of profit or loss and
other comprehensive income
An entity shall present all items of income and
expense recognized in a period:
1.in a single statement of profit or loss and other
comprehensive income; or
2.in two statements: (1) a statement displaying the
profit or loss section only (separate ‘statement of
profit or loss’ or ‘income statement’) and (2) a second
statement beginning with profit or loss and displaying
components of other comprehensive income.
Other comprehensive income for the
period
a. Changes in revaluation surplus
b. Unrealized gains and losses on investments in FVOCI securities
c. Remeasurements of the net defined benefit liability (asset)
d. Gains and losses arising from translating the financial statements
of a foreign operation
e. Effective portion of gains and losses on hedging instruments in a
cash flow hedge
OCI may be presented either (a) net of tax or (b) gross of tax.
Reclassification
adjustments
Reclassification adjustments are amounts reclassified to profit
or loss in the current period that were recognized in other
comprehensive income in the current or previous periods.
Total comprehensive
income
Total comprehensive income comprises all
components of
1.Profit or loss; and
2.Other comprehensive income.
Order/ Format of
Presentation
PAS 1 does not prescribe the order or format in
which an entity presents items.
Presentation of Expenses
1. Nature of expense method
2. Function of expense method
If an entity classifies expenses by function, it shall disclose

additional information on the nature of expenses
Disclosure of dividends
Dividends declared by an entity are disclosed
either in the
(a) notes or
(b) statement of changes in equity.
Order of presentation of
disclosures in the Notes
1. Statement of compliance with PFRSs;
2. Summary of significant accounting policies applied;
3. Supporting information for items presented in the other financial
statements; and
4. Other disclosures.
EN
D

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CONCEPTUAL

2. Going concern - An entity is not a going concern if, as of the

4. Materiality & Aggregation - Each material class of similar items must be

8. Consistency of presentation - An entity shall retain the presentation

…..and the effect of the event to the statement of financial

If an entity classifies expenses by function, it shall disclose

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