Question

Describe the IFRS that deal with disclosure and presentation standards and discuss their various requirements.

Answer 1

We will discuss about the various standards which IFRS deals with disclosure and presentation.

IAS 1: Presentation of Financial statements

IAS 1 covers the form and content of financial statements.The main componenets are.

Statement of Finnacial Postion.

Statement of Profit or loss and other comprehensive income

Statement of changes in equity

Statement of cash flows

Notes to the financial statements

IAS1 suggests a format for the statement of financial position.Certain items are specified for disclosure as line items in the financial statements.

You should appreciate the distinction between current and non-current asset and liabilities and their different treatements.

IAS 1 offers two possible formats for the statement of profit or loss or seperate profit or loss section- by function or by name. Classification by function is more concern.

IAS 1 requires a statement of equity.This shows the movement in the equity section of the statement of financial position. A full set of financial statements includes a statement of changes in equity.

Some items need to be disclosed by way of a note.

IAS 8 : Accounting Policies, Changes in accounting Estimates and Errors.

Accounting Poilicies :

Accounting policies are determined by applying the relevant IFRS Standard and considering any relevant implementation Guidence issued by the IASB for that IFRS standard.

Where there is no applicable IFRS standard or Interpretation management should use its judgement in developing and applying an acconting policy that results in information that is relevant and reliable.

Changes in accounting policies :

Changes in accounting policies are applied retrospectively.

The same accounting policies are usually adopted from period to period, to allow users to analyse trends over time in profit, Cash flows and financial position.Changes in accounting policies will therefore be rare and should be made only if:

a) Changes is requred by an IFRS standard

b) The change will result in a more appropriate presentation of events or transactions in the financial statements of the entity providing more reliable and relevant information.

Changes in accounting Estimates :

Changes in accounting estimate are not applied retrospetively.

Effect of change in an accounting estimate should be included in the determination of net profit or loss in one of:

a) The period of the change, if the change effects that period only

b)The period of the change and future periods, if the change effects both.

Errors:

Prior period errors must correct retrospectively.

IFRS 5 : Non Current Assets held for Sale and Discontinued Operations

IFRS 5 requires assets Held for sale to be presented seperately in the statement of financial position.

An entity should present and disclose information that enables users of the financial statements to evaluate the financial effects of discontinued operations and disposals of non current assets or disposal groups.

IAS 10 : Events after reporting Period

Events occuring afer the reporting period are those events both favourable and unfavourable that occur between the end of the reporting period and the date on which the financial statements are authorised for issue.Two types of events can be identified.

a) Those that provide evidence of conditions that existed at the end of the reporting period - Adjusting.

b)Those that are indicative of conditions that arose after the reporing period- Non adjusting.

IAS 33: Earnings per share

Presentation:

Basic and diuted EPS should be presented by an entity in the statement of profit or loss and other comprehensive income for each class of ordinary share that has a different right to share in the net profit or the period.The basic and diluted EPS should be presented with equal prominence for all periods presented.

Disclosure:

An entity should disclose the following.

a)The amounts used as the numerators in calculating basic and diluted EPS, and a reconciliation of those amounts to the net profit or loss for the period.

b)The weighted average number of ordinary shares used as the demoninator in calculating basic and diluted EPS, and a reconciliation of those denominators to each other.

IAS 24 Related party Disclosures.

Relationship between parents and subsidiaries must be disclosed irrespective of whether any transctions have taken place between the related parties.An entity must disclose the name of its parent and if different the ultimate conrolling party.

IAS 8: Operating Segment

Disclosures are

a)Operating segment profit or loss

b)Segment assets

c)Segment liabilities

d)Certain income and expense items.