CFAB Accounting Chapter 12. Company Financial Statements Under IFRS
CFAB Accounting Chapter 12. Company Financial Statements Under IFRS
CFAB Accounting Chapter 12. Company Financial Statements Under IFRS
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LEARNING OBJECTIVES
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TOPIC LIST
12.1. The statement of profit or loss (IAS 1)
12.2. The statement of financial position (IAS 1)
12.3. Statement of changes in equity (IAS 01)
12.4. Applying the IAS 1 formats
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12.1. THE SPL (IAS 1)
The statement of profit or loss must show balances as
set out in the IAS 1 format, including gross profit, profit
before tax and (post-tax) profit for the reporting period
Functional format
Main requirement: all items of income and expense
recognised in a period shall be included in profit or
loss
Note: SCI – beyond scope of Accounting
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12.1. THE SPL (IAS 1)
Worked example: Statement of profit or loss
Ducat plc
Statement of profit or loss for the year ended 31/12/20X3
£
Revenue 623,000
Cost of sales (414,000)
Gross profit 209,000
Other income 26,000
Distribution costs (73,000)
Administrative expenses (32,000)
Finance costs (15,000)
Profit before tax 115,000
Income tax (35,000)
Profit for the period 80,000
Note: income tax – term used in IAS 1 – refer to tax on an entity’s
profits (not to be confused with income tax (PAYE) on an
employee’s salary) 5
12.1. THE SPL (IAS 1)
12.1.1. Cost of sales, distributions costs and
administration expenses
Functional one: COS, dist costs, admin expenses
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12.1. THE SPL (IAS 1)
12.1.1. Cost of sales, distributions costs and administration
expenses
Cost of sales Distribution costs Admin expenses
- Purchases, delivery - Marketing, dist staff - Admin staff
inwards, adjusted - Sales comm. - Non-production,
for OI, CI, - Costs relating to non-dist operations
substantial loss of delivery vehicles, - Amortisation of
inventory other NCA used by intangibles
- Manufacturing dist operations - Expenses of
company: - Advertising, selling subtantial loss of
production staff, activities inventory
expenses relating to - Irrcoverable debts
production NCA expense
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12.1. THE SPL (IAS 1)
12.1.2. Other income
Dividends received on investments
Interest received on savings
Rent received from property
Discounts received from suppliers???
Insurance claim proceeds
Profits on disposal of non-current assets
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12.1. THE SPL (IAS 1)
12.1.3. Finance costs
Interest payable on bank loans and overdrafts
Interest on debt securities
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12.2. THE SFP (IAS 1)
Ducat plc - SFP as at …
ASSETS
Non-current assets
Current assets
Total assets
EQUITY AND LIABILITIES
Equity
Total equity
Non-current liabilities
Current liabilities
Total equity and liabilities
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12.2. THE SFP (IAS 1)
Points to note (extremely important!)
All tangible assets (including land and buildings) are
combined under the heading 'property, plant and
equipment’
Trade receivables and any other receivables (including VAT
due) are combined as 'trade and other receivables';
prepayments are included in the heading 'other current
assets'. The allowance for receivables is set off here.
Cash in hand and at bank are combined as 'cash and cash
equivalents'.
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12.2. THE SFP (IAS 1)
Any long-term liabilities such as bank loans or debt
securities that are not repayable within 12 months are
combined as 'long-term borrowings' under 'non-current
liabilities'. Redeemable preference shares would be
included here.
There are detailed disclosure requirements for share capital
in IAS 1, in particular of the issued, fully paid and partly paid
share capital, and of the par value. The figure included in
the statement of financial position is the called-up share
capital, both paid and unpaid.
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12.2. THE SFP (IAS 1)
Bank overdrafts, which are technically repayable on
demand, are called 'short-term borrowings'. They are not
offset against any cash and cash equivalent asset
balances, unless a right of set-off exists.
Trade payables and other payables (including VAT,
PAYE/NIC and sales commission owed, interest payable
and accruals) are combined as 'trade and other payables’.
Current amounts of tax payable are each shown as a
separate item under current liabilities.
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12.3. THE STATEMENT OF CHANGES IN EQUITY (IAS 1)
Notes: Monty Ltd paid a dividend of 20p per share to all registered shareholders on
31 December 20X8 and issued 20,000 £1 equity shares at £1.50 on 1 February
20X9. The only other movement in equity in the year was in respect of profit for
the period of £55,700.
Requirement:
Prepare Monty Ltd's statement of changes in equity for the year ended 30 April
20X9.
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12.4. APPLYING THE IAS 1 FORMATS
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End of Chapter 12
Thank you!
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