PAS 1: Presentation of Financial • Other changes in equity.

Statements • Cash flows.

Overview of the PAS 1
*PAS 1 Presentation of Financial
Statements sets out the overall Components of Financial Statements
requirements for financial statements,
including how they should be structured, A complete set of financial statements
the minimum requirements for their comprises:
content and overriding concepts such as
• a statement of financial position
going concern, the accrual basis of
(balance sheet) at the end of the
accounting and the current/non-current
period 
distinction.
• a statement of profit or loss and
*SCOPE: Applies to all general purpose other comprehensive income for the
financial statements, that are based on period (presented as a single
Philippine Financial Reporting Standards. statement, or by presenting the
profit or loss section in a separate
General purpose financial statements are statement of profit or loss,
those intended to serve users who do not immediately followed by a statement
have the authority to demand financial presenting comprehensive income
reports tailored for their own needs. beginning with profit or loss) 
• a statement of changes in equity for
Purpose of Financial Statements the period 

The objective of general purpose financial • a statement of cash flows for the
statements is to provide information about period 
the financial position, financial • notes, comprising a summary of
performance, and cash flows of an entity significant accounting policies and
that is useful to a wide range of users in other explanatory notes comparative
making economic decisions. To meet that information prescribed by the
objective, financial statements provide standard.
information about an entity's:
• Assets.
• Liabilities.
• Equity.
• Income and expenses, including
gains and losses.
Overall Considerations for Going Concern
Financial Statements • An entity preparing PFRS financial
statements is presumed to be a
Fair Presentation and Compliance
going concern.
with PFRSs
• If management has significant
• The financial statements must concerns about the entity's ability to
"present fairly" the financial position, continue as a going concern, the
financial performance and cash flows uncertainties must be disclosed.
of an entity.
• If management concludes that the
• PAS 1 requires that an entity whose entity is not a going concern, the
financial statements comply with financial statements should not be
PFRSs make an explicit and prepared on a going concern basis,
unreserved statement of such in which case PAS 1 requires a series
compliance in the notes. of disclosures.
Inappropriate accounting policies are
not rectified either by disclosure of
the accounting policies used or by Accrual Basis of Accounting
notes or explanatory material.
• PAS 1 requires that an entity prepare
its financial statements, except for
• The application of PFRSs, with cash flow information, using the
additional disclosure when accrual basis of accounting.
necessary, is presumed to result in
financial statements that achieve a
fair presentation. Consistency of Presentation
• PAS 1 acknowledges that, in • The presentation and classification of
extremely rare circumstances, items in the financial statements
management may conclude that shall be retained from one period to
compliance with an PFRS the next unless a change is justified
requirement would be so misleading either by a change in circumstances
that it would conflict with the or a requirement of a new PFRS.
objective of financial statements set
out in the Framework. In such a case,
the entity is required to depart from
the PFRS requirement, with detailed
disclosure of the nature, reasons,
and impact of the departure.
 Materiality and Aggregation and a warning about problems of
comparability.
• Each material class of similar items
must be presented separately in the
financial statements. Statement of Financial
• Dissimilar items may be aggregated Position
only if they are individually
immaterial. Current and Noncurrent
classification
Offsetting • An entity must normally present a
classified statement of financial
• Assets and liabilities, and income and
position, separating current and non-
expenses, may not be offset unless
current assets and liabilities, unless
required or permitted by a Standard
presentation based on liquidity
or an Interpretation.
provides information that is reliable.

Comparative Information
• PAS 1 requires that comparative
information shall be disclosed in When to classify asset as
respect of the previous period for all current?
amounts reported in the financial
statements, both face of financial • expected to be realized in the
statements and notes, unless entity's normal operating cycle 
another Standard requires
• held primarily for the purpose of
otherwise. If comparative amounts
trading 
are changed or reclassified, various
disclosures are required. • expected to be realized within 12
months after the reporting period 
• cash and cash equivalents (unless
Frequency of Reporting restricted).
• There is a presumption that financial All other assets are non-current
statements will be prepared at least
annually. If the annual reporting
period changes and financial
statements are prepared for a
different period, the enterprise must
disclose the reason for the change
 When to classify liability as ▶The intention is supported by an
current? agreement to refinance, or reschedule the
payments, on a long-term basis is
• expected to be settled within the completed after the end of the reporting
entity's normal operating cycle  period and completed before the financial
• held for purpose of trading  statements are authorized for issue.
• due to be settled within 12
months for which the entity does not
have the right at the end of the
reporting period to defer settlement Liabilities: Breach of a Loan
beyond 12 months. Covenant
All other liabilities are non-current • If a liability has become payable on
demand because an entity has
breached an undertaking under a
Liabilities: Issue on long-term loan agreement on or
refinancing before the end of the reporting
1.) If the entity has the discretion to period, the liability is current, even if
refinance, or to roll over the the lender has agreed, after the end
obligation for at least twelve of the reporting period and before
months after the end of the the authorization of the financial
reporting period under an statements for issue, not to demand
existing loan facility, it classifies payment as a consequence of the
the obligation as non-current, breach.
even if it would be due with in a • However, the liability is classified as
shorter period. non-current if the lender agreed by
the end of the reporting period to
provide a period of grace ending at
2.) An entity classifies its financial least 12 months after the end of the
liabilities as current when they reporting period, within which the
are due to be settled within entity can rectify the breach and
twelve months after the end of during which the lender cannot
the reporting period, even if: demand immediate repayment.

▶The original term was for a

period longer than twelve
months; and

Shareholder’s Equity
Regarding issued share capital and components of other comprehensive
reserves, the following disclosures income
• Other comprehensive - items of
are required:
income and expense (including
 numbers of shares authorized, issued reclassification adjustments) that are
and fully paid, and issued but not not recognized in profit or loss as
fully paid required or permitted by other IFRSs

 par value (or that shares do not have • Total comprehensive income - the
a par value) change in equity during a period
resulting from transactions and other
 a reconciliation of the number of events, other than those changes
shares outstanding at the beginning resulting from transactions with
and the end of the period owners in their capacity as owners

 description of rights, preferences,

and restrictions
Presentation:
 treasury shares, including shares
held by subsidiaries and associates An entity has a choice of presenting:
1.) a single statement of profit or loss and
 shares reserved for issuance under other comprehensive income, with profit or
options and contracts loss and other comprehensive income
presented in two sections, or
 a description of the nature and
purpose of each reserve within 2.) two statements:
equity. • a separate statement of profit
or loss
•  a statement of
Statement of comprehensive
Comprehensive Income income, immediately
following the statement of
profit or loss and beginning
with profit or loss

• Profit or loss - the total of income

less expenses, excluding the
 (c) The amounts of transactions with
owners in their capacity as owners,
showing separately contributions by
and distributions to owners
(d) For each component of equity,
reconciliation between the carrying
amount at the beginning and the end
of the period, separately disclosing
each change.

Statement of Cash Flows

Content of Statement of Cash Flows
• Cash flow information provides users
of financial statements with a basis
to assess the ability of the entity to
generate cash and cash equivalents
and the needs of the entity to utilize
those cash flows.
Statement of Changes in Equity
• Cash flow activities are classified into
Content of Statement of Changes three which are:
in Equity
1.)_______________________
An entity shall present a statement of
2.)_______________________
changes in equity showing in the statement:
3.)_______________________
(a) Total comprehensive income for the
period, showing separately the total
amounts attributable to owners of
the parent and to minority interest
(b) For each component of equity, the
effects of retrospective application
or retrospective restatement
recognized in accordance with PAS 8
  The measurement basis (or
bases) used in preparing the
Notes to the Financial Statements financial statements; and
Content of the Notes to F/S  The other accounting policies
used that are relevant to an
The notes must:
understanding of the financial
• Present information about the basis statements.
of preparation of the financial
statements and the specific
accounting policies used; • Supporting information for items
presented on the face of the
• Disclose any information required by statement of financial position,
PFRSs that is not presented on the income statement, statement of
face of the statement of financial changes in equity, and statement of
position, income statement, ash flows, in the order in which each
statement of changes in equity, or statement and each line item is
statement of cash flows presented.
• Provide additional information that is • Other disclosures, including:
not presented on the face of the
statement of financial position, • Contingent liabilities and
income statement, statement of unrecognized contractual
changes in equity, or statement of commitments
cash flows that is deemed relevant to • Non-financial disclosures,
an understanding of any of them. such as the entity's financial
risk management objectives
and policies.
Content of the Notes to F/S
Disclosure of judgments - an entity
• Notes should be cross-referenced
must disclose, in the summary of
from the face of the financial
significant accounting policies or
statements to the relevant note. The
other notes, the judgments, apart
notes should normally be presented
from those involving estimations,
in the following order:
that management has made in the
• A statement of compliance with process of applying the entity's
PFRSs accounting policies that have the
most significant effect on the
• A summary of significant accounting
amounts recognized in the financial
policies applied, including:
statements.