EC staff consolidated version as of 18 February 2011FOR INFORMATION PURPOSES ONLY1International Accounting Standard 1Presentation of Financial StatementsObjective1 This Standard prescribes the basis for presentation of general purpose financial statements to ensurecomparability both with the entity’s financial statements of previous periods and with the financialstatements of other entities. It sets out overall requirements for the presentation of financial statements,guidelines for their structure and minimum requirements for their content.Scope2 An entity shall apply this Standard in preparing and presenting general purpose financial statementsin accordance with International Financial Reporting Standards (IFRSs).3 Other IFRSs set out the recognition, measurement and disclosure requirements for specific transactions andother events.4 This Standard does not apply to the structure and content of condensed interim financial statements preparedin accordance with IAS 34 Interim Financial Reporting. However, paragraphs 15–35 apply to such financialstatements. This Standard applies equally to all entities, including those that present consolidated financialstatements and those that present separate financial statements as defined in IAS 27 Consolidated andSeparate Financial Statements.5 This Standard uses terminology that is suitable for profit-oriented entities, including public sector businessentities. 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 thefinancial statements themselves.6 Similarly, entities that do not have equity as defined in IAS 32 Financial Instruments: Presentation (egsome mutual funds) and entities whose share capital is not equity (eg some co-operative entities) may needto adapt the financial statement presentation of members’ or unitholders’ interests.Definitions7 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 meetthe needs of users who are not in a position to require an entity to prepare reports tailored to theirparticular information needs.Impracticable Applying a requirement is impracticable when the entity cannot apply it after makingevery reasonable effort to do so.International Financial Reporting Standards (IFRSs) are Standards and Interpretations adopted bythe International Accounting Standards Board (IASB). They comprise:(a) International Financial Reporting Standards;(b) International Accounting Standards; and(c) Interpretations developed by the International Financial Reporting InterpretationsCommittee (IFRIC) or the former Standing Interpretations Committee (SIC).EC staff consolidated version as of 18 February 2011FOR INFORMATION PURPOSES ONLY2Material 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. Materialitydepends on the size and nature of the omission or misstatement judged in the surroundingcircumstances. The size or nature of the item, or a combination of both, could be the determiningfactor.Assessing whether an omission or misstatement could influence economic decisions of users, and so bematerial, requires consideration of the characteristics of those users. The Framework for the Preparationand Presentation of Financial Statements states in paragraph 25 that ‘users are assumed to have a reasonableknowledge of business and economic activities and accounting and a willingness to study the informationwith reasonable diligence.’ Therefore, the assessment needs to take into account how users with suchattributes 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 of comprehensive income, separate statement of comprehensive income (if presented),statement of changes in equity and statement of cash flows. Notes provide narrative descriptions ordisaggregations of items presented in those statements and information about items that do notqualify for recognition in those statements.Other comprehensive income comprises items of income and expense (including reclassificationadjustments) that are not recognised in profit or loss as required or permitted by other IFRSs.The components of other comprehensive income include:(a) changes in revaluation surplus (see IAS 16 Property, Plant and Equipment and IAS 38 IntangibleAssets);(b) actuarial gains and losses on defined benefit plans recognised in accordance with paragraph 93Aof IAS 19 Employee Benefits;(c) gains and losses arising from translating the financial statements of a foreign operation (see IAS21 The Effects of Changes in Foreign Exchange Rates);(d) gains and losses on remeasuring available-for-sale financial assets (see IAS 39 FinancialInstruments: Recognition and Measurement);(e) the effective portion of gains and losses on hedging instruments in a cash flow hedge (see IAS39).Owners are holders of instruments classified as equity.Profit or loss is the total of income less expenses, excluding the components of other comprehensiveincome.Reclassification adjustments are amounts reclassified to profit or loss in the current period that wererecognised in other comprehensive income in the current or previous periods.Total comprehensive income is the change in equity during a period resulting from transactions andother events, other than those changes resulting from transactions with owners in their capacity asowners.
Total comprehensive income comprises all components of ‘profit or loss’ and of ‘other comprehensive
income’.
8 Although this Standard uses the terms ‘other comprehensive income’, ‘profit or loss’ and ‘total
comprehensive income’, an entity may use other terms to describe the totals as long as the meaning is clear.
For example, an entity may use the term ‘net income’ to describe profit or loss.
8A The following terms are described in IAS 32 Financial Instruments: Presentation and are used in this
Standard with the meaning specified in IAS 32:
(a) puttable financial instrument classified as an equity instrument (described in paragraphs 16A and
16B of IAS 32)
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(b) an instrument that imposes on the entity an obligation to deliver to another party a pro rata share
of the net assets of the entity only on liquidation and is classified as an equity instrument
(described in paragraphs 16C and 16D of IAS 32).
Information to be presented either in the statement of financial position or in
the notes
Financial statements
Purpose of financial statements
9 Financial statements are a structured representation of the financial position and financial performance of an
entity. The objective of financial statements is to provide information about the financial position, financial
performance and cash flows of an entity that is useful to a wide range of users in making economic
decisions. Financial statements also show the results of the management’s stewardship of the resources
entrusted to it. To meet this objective, financial statements provide information about an entity’s:
(a) assets;
(b) liabilities;
(c) equity;
(d) income and expenses, including gains and losses;
(e) contributions by and distributions to owners in their capacity as owners; and
(f) cash flows.
This information, along with other information in the notes, assists users of financial statements in predicting
the entity’s future cash flows and, in particular, their timing and certainty.
Complete set of financial statements
10 A complete set of financial statements comprises:
(a) a statement of financial position as at the end of the period;
(b) a statement of comprehensive income for the period;
(c) a statement of changes in equity for the period;
(d) a statement of cash flows for the period;
(e) notes, comprising a summary of significant accounting policies and other explanatory
information; and
(f) 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.
An entity may use titles for the statements other than those used in this Standard.
11 An entity shall present with equal prominence all of the financial statements in a complete set of
financial statements.
12 As permitted by paragraph 81, an entity may present the components of profit or loss either as part of a
single statement of comprehensive income or in a separate statement of comprehensive income. When an
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statement of comprehensive income is presented it is part of a complete set of financial statements and shall
be displayed immediately before the statement of comprehensive income.
13 Many entities present, outside the financial statements, a financial review by management that describes and
explains the main features of the entity’s financial performance and financial position, and the principal
uncertainties it faces. Such a report may include a review of:
(a) the main factors and influences determining financial performance, including changes in the
environment in which the entity operates, the entity’s response to those changes and their effect,
and the entity’s policy for investment to maintain and enhance financial performance, including its
dividend policy;
(b) the entity’s sources of funding and its targeted ratio of liabilities to equity; and
(c) the entity’s reso
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