seminar on ifrs by the institute of company secretaries of india with reliance communications &...
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SEMINAR ON IFRSby
THE INSTITUTE OF COMPANY SECRETARIES OF INDIA
WITH RELIANCE COMMUNICATIONS &
WIRC ICWAI
22nd AUGUST 2009
• THRU 50+ CITIES• AND 75+ RELIANCE VIDEO CONF• LOCATIONS• SPEAKER :• Rammohan Bhave, CS, ICWA, CA• [email protected]• Dr Mrs Anjali Bhave, ICWA, Ph.D.
IAS 1 Presentation of Financial Statements
Rammohan Bhave & Dr Anjali [email protected] [email protected]
+91 9004043365, +91 9322249029+91 9322249029
IFRS Based Financial Statements
• IAS -1 “ Presentation of Financial Statements” is a foundation standard that explains basic accounting and financial reporting principles and style of presentation.
IFRS Based Financial StatementsA complete set of Financial Statements comprise of – A Statement of Financial Position as at the end of the
year; – A Statement of Comprehensive Income for the period;– A Statement of Changes in Equity for the period;– A Statement of Cash Flows for the period;– Notes comprising of a summary of significant accounting
policies and other explanatory information ;– 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. [ Para 10, IAS-1]
Structure of Statement of Financial Position 2009 2008
ASSETS
Non-current Assets
Property , Plant & Equipment
Goodwill
Other Intangible Assets
Investments in Associates
Available for Sale Investments
Current Assets
Inventories
Trade Receivables
Other Current Assets
Cash & Cash Equivalents
Total Assets
EQUITY AND LIABILITIES
Equity attributable to the owners of the parent
Share Capital
Retained Earnings
Other components of Equity
Non-controlling Interest
Total Equity
Structure of Statement of Financial Position
2009 2008
Non-current Liabilities
Long-term borrowings
Deferred tax
Long term provisions
Total non-current liabilities
Current Liabilities
Trade and other payables
Short-term borrowings
Current portion of long- term borrowings
Current tax payable
Short-term provisions
Total current liabilities
Total liabilities
Minimum Line Items to be Presented in Statement of Financial Position
( Reference Para 54 of IAS 1
(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;
Minimum Line Items to be Presented in Statement of Financial Position
( Reference Para 54 of IAS 1(h) Trade and other receivables;
(i) Cash and cash equivalents;
(j) The total of assets classified as held for sale and assets included in disposal groups classified as held for sale in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations;
(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 Income Taxes;
(o) Deferred tax liabilities and deferred tax assets, as defined in IAS 12;
(p) Liabilities included in disposal groups classified as held for sale in accordance with IFRS 5;
(q) Non-controlling interests, presented within equity; and
(r) Issued capital and reserves attributable to owners of the parent.
Current Assets• Current assets should have any of the following characteristics: • These are expected to be realised within the normal operating cycle
of the entity or within twelve months after the balance sheet date whichever is higher ; examples are receivables, , advances, loans , etc. Financial instruments like available for sale , held to maturity and loans which will be realised within a period of twelve months from the date of balance sheet date.
• These are intended for sale or consumption within the normal operating cycle of the entity; example inventories.
• These are held primarily for the purpose of trading ; example Held for Trading Financial Instruments.
• These are cash and cash equivalents. As per IAS-7 cash comprises of cash on hand and demand deposits. Cash equivalents are highly liquid investments that are readily convertible to known amounts of cash , and which are subjected to insignificant risk of changes in value.
Current Liabilities• Liabilities are classified as current liabilities if
these satisfy any of the following criteria:– These are expected to be settled in the entity’s
normal operating cycle.– These are primarily held for trading.– These are due to be settled within a period of
twelve months from the balance sheet date.– The entity does not have an unconditional right to
defer settlement of the liability for at least twelve months after the balance sheet date.
• All other liabilities are classified as non-current liabilities.
Statement of Comprehensive Income
• Two-part Statement of Comprehensive Income – First part presents Statement of Income– Second part presents Statement of Other Comprehensive
Income
• Two Separate Statements • Statement of Other Comprehensive Income presents
certain items of unrealised gain / loss to be directly accounted for in the equity. This statement intends to present the periodic effect.
Statement of Income
• There are two distinct presentation styles of the Statement of Income – income statement portion can be either
presented by nature of expense or function .
Classification of Expenses by Nature
Income Statement 2009 2008
RevenueOther IncomeChanges in inventories of finished goods
and work in progressWork performed by the entity and
capitalised Raw material consumedEmployee Benefit ExpensesDepreciation and Amortisation ExpensesImpairment of Property , Plant and
Equipment and Intangible AssetsOther ExpensesFinance CostsShare of profit of associates
Classification of Expenses by Nature
Income Statement 2009 2008
Profit Before TaxIncome tax expenseProfit for the year from continuing
operationsProfit ( Loss) for the year from
discontinued operationsProfit for the yearProfit attributable to :Owners of the entity Non-controlling interestEarning per shareBasicDiluted
Classification of Expenses by Functions
2009 2008
RevenueCost of salesGross ProfitOther IncomeDistribution CostsAdministrative ExpensesOther ExpensesFinance CostsShare of profit of associates
Classification of Expenses by Functions2009 2008
Profit Before TaxIncome tax expenseProfit for the year from continuing
operationsProfit ( Loss) for the year from discontinued
operationsProfit for the yearProfit attributable to :Owners of the entity Non-controlling interestTotal Comprehensive Income attributable to
:Owners of the entity Non-controlling interestEarning per share4
BasicDiluted
Statement of Other Comprehensive Income
2009 2008
Profit for the Year
Other Comprehensive Income :Exchange differences in translating foreign
operationsGain ( loss) on fair value changes in
available for sale financial instrumentsGain (loss) fair value changes in Cash Flow
HedgesGain on Revaluation of Property , Plant and
EquipmentActuarial Gain ( Loss) on defined benefit
pension plansShare of other comprehensive income of
associatesIncome tax relating to items of other
comprehensive income
Statement of Other Comprehensive Income
2009 2008
Other Comprehensive Income net of tax
Total Comprehensive Income for the year
Profit attributable to :Owners of the entity Non-controlling interestTotal Comprehensive Income
attributable to :Owners of the entity Non-controlling interestEarning per shareBasicDiluted
Information to be presented on the face of the Income Statement ( or Income Statement portion of the Statement of
Comprehensive Income) or in the Note
a. Write-downs of inventories to net realisable value as well as reversals of such write downs
b. Write down of property , plant and equipment to recoverable amount as well as reversals of such write downs
c. Restructuring activities of an entity and reversals of any provisions for the costs of restructuring
d. Disposal of items of property, plant and equipmente. Disposal of investmentsf. Discontinued operationsg. Litigation settlementsh. Other reversals of provisions.
Statement of Changes in Equity
• Paras 106-110 of IAS 1 set out the principles for presentation of Statement of Changes in Equity . This statement is meant for depicting the movement in equity during the accounting period. This statement reflects –– Various components of the equity with separate
presentation of non-controlling interest ;– Distribution of total comprehensive income during
the year to various equity components and non-controlling interest ;
– Distribution to owners by way of dividend and other transaction with owners like issue of shares.
Statement of Changes in Equity
• This statement makes reconciliation of balances of various equity components at the beginning and end of the accounting period. Para 107 of IAS 1 particularly requires disclosures of dividend recognised and distributed either in the Statement of Changes in Equity or in Notes along with per share information.