Presented in a question and answer format, The Vest Pocket IFRS provides a brief explanation of each IFRS topic, the issues involved, and the solution. Coverage includes calculations, journal entries, flowcharts outlining various options, footnotes disclosures, and brief examples.
Provides quick answers to specific questions in a Q & A format
Focuses on the most common accounting problems arising from a particular IFRS topic
Calculations, footnotes disclosures, and brief examples are provided
Other titles by Bragg: The Vest Pocket Controller, Accounting Best Practies, Sixth Edition, and Just-in-Time Accounting, Third Edition
The first book of its kind to answer IFRS issues on the spot, The Vest Pocket IFRS gives you the quick, specific IFRS answers you need right now.
Profit or loss is the total of an entityâs revenue and expenses, not including any components of other comprehensive income (see the next question). It is also known as net income.
Total comprehensive income is the combination of profit or loss and other comprehensive income.
What Is Other Comprehensive Income?
Other comprehensive income includes financial items that are not permitted in profit or loss. Items that you should insert in other comprehensive income include:
âą Actuarial gains and losses on defined benefit plans (see the Employee Benefits chapter)
âą Available-for-sale gains and losses caused by remeasurement (see the Financial Instruments: Recognition and Measurement chapter)
âą Cash flow hedge gains and losses, effective portion only (see the Financial Instruments: Recognition and Measurement chapter)
âą Changes in the revaluation surplus (see the Property, Plant, and Equipment chapter)
âą Foreign currency translation gains and losses (see the Effects of Foreign Exchange Rate Changes chapter)
Reclassification adjustments are amounts reclassified into profit or loss in the current period that had been recognized in other comprehensive income in either the current or previous periods.
What Information Is Included in a Complete Set of Financial Statements?
All of the following should be included in a complete set of financial statements for a reporting period:
Statement
Description
Statement of financial position
Contains all asset, liability, and equity items
Statement of comprehensive income
Contains all income and expense items
Statement of changes in equity
Reconciles changes in equity for the presented periods
Statement of cash flows
Displays all cash inflows and outflows from operating, financing, and investing activities
Notes
Summarizes accounting policies and explanatory information
You should clearly identify these financial statements and distinguish them from other information presented in the same report. It is important to do this, because International Financial Reporting Standards (IFRSs) apply only to financial statements; thus, users will be more likely to understand which documents within the report adhere to specific accounting standards.
You should include in the financial statements a prominent display of the name of the reporting entity (and note any change in it from the preceding reporting period), whether the statements are for a single entity or group of entities, the period covered by the statements, the presentation currency, and the level of rounding used to present amounts. This information usually is presented most easily in column and page headers.
It is not necessary, but useful, for management to also present a financial review that includes such items as the primary factors impacting financial performance, its investment policy, dividend policy, sources of funding, targeted financial ratios, and any other resources not recognized in the financial statements.
What Line Items Do I Include in the Statement of Financial Position?
You should include the following line items, at a minimum, in the statement of financial position:
Assets
âą Cash and cash equivalents
âą Trade and other receivables
âą Investments accounted for using the equity method
âą Other financial assets
âą Current tax assets
âą Investment property
âą Inventories
âą Biological assets
âą Property, plant, and equipment
âą Intangible assets
âą Assets held for sale
âą Deferred tax assets (do not classify as a current asset)
Liabilities
âą Trade and other payables
âą Provisions
âą Current tax liabilities
âą Other financial liabilities
âą Deferred tax liabilities (do not classify as a current liability)
âą Liabilities held for sale
Equity
âą Noncontrolling interests
âą Issued capital and reserves attributable to owners of the parent
You should add headings and subtotals to this minimum set of information if it will improve a userâs understanding of the financial statements. You should add other line items when their size, nature, or function makes separate presentation relevant to the user.
EXAMPLE 1.1
Katana Cutlery presents its statement of financial position in the following format:
KATANA CUTLERY STATEMENT OF FINANCIAL POSITION
(000s)
as at 12/ 31/x2
as at 12/ 31/x1
ASSETS
Noncurrent assets Property, plant, and equipment
âŹ551,000
âŹ529,000
Goodwill
82,000
82,000
Other intangible assets
143,000
143,000
Investments in associates
71,000
93,000
Available-for-sale financial assets
121,000
108,000
968,000
955,000
Current assets
Inventories
139,000
128,000
Trade receivables
147,000
139,000
Other current assets
15,000
27,000
Cash and cash equivalents
270,000
215,000
571,000
509,000
Total assets
âŹ1,539,000
âŹ1,464,000
EQUITY AND LIABILITIES
Equity attributable to owners of the parent
Share capital
âŹ500,000
âŹ500,000
Retained earnings
425,000
350,000
Other components of equity
25,000
19,000
950,000
869,000
Noncontrolling interests
57,000
38,000
Total equity
1,007,000
907,000
Noncurrent liabilities
Long-term borrowings
85,000
65,000
Deferred tax
19,000
17,000
Long-term provisions
38,000
34,000
Total noncurrent liabilities
142,000
116,000
Current liabilities
Trade and other payables
217,000
198,000
Short-term borrowings
133,000
202,000
Current portion of long-term borrowings
5,000
5,000
Current tax payable
26,000
23,000
Short-term provisions
9,000
13,000
Total current liabilities
390,000
441,000
Total liabilities
532,000
557,000
Total equity and liabilities
âŹ1,539,000
âŹ1,464,000
What Information Should I Disclose in the Statement of Financial Position?
You should provide additional subclassifications of the primary line items required for the statement of financial position, if needed to clarify an entityâs operations, or to be in accordance with the various IFRSs. Examples of these additional classifications are:
âą Separate property, plant, and equipment into different asset classifications.
âą Separate accounts receivable into amounts receivable from trade customers, related parties, and prepayments.
âą Separate inventories into merchandise, supplies, raw materials, work in process, a...
