ACCOUNTING FOR COMPANY

STATEMENT OF FINANCIAL POSITION (ASSETS)

Learning outcomes

Understand the accounting items – assets, liabilities and owners’ equity

Understand the recognition, classification and measurement of accounting items – assets, liabilities and owners’ equity

Assets

Definition: An asset is a resource controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity.

Recognition Recognition is the process of incorporating in the balance

sheet or income statement an item that meets the definition of an element and satisfies the following criteria for recognition: It is probable that any future economic benefit

associated with the item will flow to or from the entity; and

The item's cost or value can be measured with reliability.

Based on these general criteria:

An asset is recognised in the balance sheet when it is probable that the future economic benefits will flow to the entity and the asset has a cost or value that can be measured reliably.

Measurement Measurement involves assigning monetary amounts at

which the elements of the financial statements are to be recognised and reported.

The IFRS Framework acknowledges that a variety of measurement bases are used today to different degrees and in varying combinations in financial statements, including: Historical cost Current cost Net realisable value Present value (discounted)

Historical cost is the measurement basis most commonly used today, but it is usually combined with other measurement bases.

Classification

An entity must normally present a classified statement of financial position, separating current and noncurrent assets and liabilities, unless a presentation based on liquidity is more relevant.

Current assets are cash; cash equivalent; assets held for collection, sale, or consumption within the entity's normal operating cycle; or assets held for trading within the next 12 months. All other assets are noncurrent. [IAS 1.66]

Minimum items on the face of the statement of financial position [IAS 1.54]

(a) property, plant and equipment (b) investment property (c) intangible assets (d) financial assets (excluding amounts shown under

(e), (h), and (i)) (e) investments accounted for using the equity method (f) biological assets (g) inventories (h) trade and other receivables (i) cash and cash equivalents (j) assets held for sale

Cont.

(k) trade and other payables (l) provisions (m) financial liabilities (excluding amounts shown under

(k) and (l)) (n) liabilities and assets for current tax, as defined in

IAS 12 (o) deferred tax liabilities and deferred tax assets, as

defined in IAS 12 (p) liabilities included in disposal groups (q) non-controlling interests , presented within equity

and (r) issued capital and reserves attributable to owners of

the parent

Presentation in SFP

Property, plant and equipment Disclosed on the face of SFP – The aggregate

amount Disclosed in the notes - The details are

presented in the notes under separate headings concerning the amount of land and building, plant and machinery and other categories of non-current assets. To disclose accumulated depreciation to date for each assets and movements during the year.

By way of notes, the methods and rate/useful life of depreciation for each non-current assets are to be stated.

Cont. Revalued non-current assets – disclosure is to be

made of the amount and the year of valuation and whether an external valuer did the valuation

Assets disposed of or held to be disposed during the period – disclosed together with assets acquired on installment purchased plan

To state any impairment loss and accumulated impairment loss

Intangible assets Disclosed on the face of SFP - Aggregate amount Disclosed in the notes - the details (accumulated

amortisation, impairment loss etc.)

Cont.

Investments/Financial Instruments Disclosed on the face of SFP – the aggregate

amount Disclosed in the notes

Separately the amounts of investments in shares, debentures, government securities, in subsidiaries.

Distinguished between investments that are quoted, listed or shares purchased that are not quoted.

State the quoted market values of investments which are quoted, and the directors’ valuation of investments that do not have a market value.

For quoted investments, a distinction should be made between those quoted, listed or dealt in on ant stock exchange in and outside Malaysia.

Cont.Inventories To be valued at lower of cost and net realisable value

Receivables Should be disclosed under separate headings of:

i. Trade debts and bills receivablesii. Loan to a directoriii. Deposits with licensed banks, finance companies,

other corporations and other depositsiv. Amount owing by holding/subsidiaries/associated

companies

Cash and cash equivalent Cash deposits are to be distinguished as to those with

licensed banks, finance companies, other corps and others