Which of the following is required under IAS 1 presentation of financial statements?

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The accounting standard IAS 1 sets out the principles for the presentation of general purpose financial statements. Find articles, books and online resources providing quick links to the standard, summaries, guidance and news of recent developments.

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Unaccompanied version of IAS 1
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IFRS 2018: Interpretation and application of IFRS standards
PKF (2018)
This Wiley guide has been fully updated to help practitioners apply and comply with the latest international financial reporting standards. It provides detailed guidance along with illustrative examples. The chapter on presentation of financial statements covers:

• Financial statements
• General features
• Structure and content
• Illustrative financial statements.

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*UK qualifying parents and subsidiaries can take advantage of FRS 101 Reduced Disclosure Framework. Find out more on which entities qualify and the criteria to be met.

Synopsis

A complete set of financial statements includes:

• A statement of financial position (balance sheet) at the end of the period
• A statement of profit or loss and other comprehensive income (income statement) for the period
• A statement of changes in equity for the period
• A statement of cash flows (cash flow statement) for the period
• Notes to the accounts

The names of the main statements are not mandatory.

IAS 1 Revised also requires a statement of financial position at the start of the earliest comparative period where there has been a retrospective adjustment to the accounts or reclassification of items.

The statement of profit or loss and other comprehensive income, as the name suggests, presents profit and loss for the period as well as other comprehensive income. Other comprehensive income includes income and expenses not recognised in profit or loss such as revaluation surpluses. The statement of profit or loss and other comprehensive income may be presented either as one statement or a separate statement of profit or loss and statement showing other comprehensive income.

The standard provides guidance on the form and content of the financial statements and the underlying accounting concepts. It also requires financial statements to present fairly the position, performance and cash flows of an entity. This is normally achieved by the application of IFRS.

• Read the unaccompanied version of IAS 1

The International Accounting Standards Board (IASB) provides free access to the consolidated unaccompanied international accounting standards for the current year through its website. Free registration is required.

This unaccompanied version does not include additional content that accompanies the full standard, such as illustrative examples, implementation guidance and bases for conclusions.

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Recent amendments

Full access to details of all the amendments is only available to Financial Reporting Faculty members. Find out how to join the faculty.

The following interpretations relate to IAS 1

• IFRIC 1 Existing Decommissioning, Restoration and Similar Liabilities
  Addresses accounting for a change in a provision that is included in the carrying amount of an item of PPE.

• IFRIC 14 IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction
  Provides general guidance on how to assess the limit in IAS 19 on the amount of the surplus that can be recognised as an asset. Explains how the pensions asset or liability may be affected when there is a statutory or contractual minimum funding requirement

• IFRIC 17 Distribution of Non-cash Assets to Owners
  Addresses the accounting for dividends of non-cash assets, including those where there is a cash alternative.

• IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments
  Addresses the accounting by an entity which issues equity instruments in order to settle, in full or part, a financial liability.

• IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine
  Addresses the accounting treatment of mine waste materials, which are the materials removed by mining entities in order to gain access to mineral ore deposits.

• IFRIC 21 Levies
  Provides guidance on when to recognise liability for a levy imposed by a government.

• IFRIC 23 Uncertainty over Income Tax Treatments
  Clarifies how to apply the recognition and measurement requirements of IAS 12 when there is uncertainty over income tax treatments.

• SIC 7 Introduction of the Euro
  The effective start of the EMU after the reporting date does not alter the requirements of IAS 21 at the reporting date.

• SIC 25 Income Taxes – Changes in the Tax Status of an Enterprise or its Shareholders
  Addresses the deferred tax consequences of changes in tax status of an enterprise or its shareholders.

• SIC 27 Evaluating the Substance of Transactions in the Legal Form of a Lease
  Addresses issues that may arise when an arrangement between an entity and investor involves the legal form of a lease.

• SIC 29 Disclosure – Service Concession Arrangements
  Prescribes disclosures required by a concession operator and concession provider joined by a service concession arrangement.

• SIC 32 Intangible Assets – Website Costs
  Addresses accounting for costs associated with the development of a website

Current proposals

1. ED/2019/7 General Presentation and Disclosures was issued in December 2019. This is the exposure draft of a proposed new standard that would replace IAS 1. The standard would carry forward most of the current requirements of IAS 1 and add supplementary requirements, including:
   • Categorising items in profit or loss as operating, investing or financing
   • Requiring additional profit subtotals
   • Distinguishing between integral and non-integral associates and joint ventures
   • Removing the choice of how to present cash flows from dividends and interest
   • Requiring additional disclosure about unusual items
   • Providing disclosure of management performance measures
   • Read ED/2019/7 General Presentation and Disclosures
2. ED/2021/9 Non-current Liabilities with Covenants was issued in November 2021. It proposes to amend IAS 1 to:
   • Specify that conditions with which an entity must comply within 12 months after the reporting period do not affect the classification of a liability as current or non-current;
   • Require that entities instead present separately, and disclose information about, liabilities with such conditions;
   • Defer the effective date of the 2020 amendments (amendment 5 above) so that entities are not required to change their assessment of the classification of liabilities before the proposed amendments in ED/2021/9 are in effect.
   • Read ED/2021/9 Non-current Liabilities with Covenants

UK reduced disclosures – FRS 101

UK qualifying parents and subsidiaries can take advantage of FRS 101 Reduced Disclosure Framework. Find out more on which entities qualify and the criteria to be met.

Amendments to the standard for FRS 101 preparers

Where an entity applies FRS 101, it is preparing Companies Act accounts rather than IAS accounts. Therefore the following amendments must be made to IAS 1 in order to achieve compliance with the Companies Act and related Regulations:

• The statement of financial position must comply with the balance sheet format requirements of the Companies Act.
• The statement of profit or loss and other comprehensive income must comply with the profit and loss account format requirements of the Companies Act.
• Ordinary activities of an entity are defined and extraordinary items are described as highly abnormal material items arising from events falling outside an entity’s ordinary activities.
• It is clarified that items of income or expense are not recognised in profit or loss where such recognition is prohibited by the Companies Act.

Disclosure exemptions for FRS 101 preparers

FRS 101 paragraph 8(f) states that a qualifying entity is exempt from the IAS 1 requirement to present the following within a set of financial statements:

• A statement of cash flows for the period;
• A third statement of financial position when a retrospective adjustment or reclassification is made;
• A statement of compliance with IFRS;
• A reconciliation of property, plant and equipment, intangible assets, investment properties, biological assets and the number of shares outstanding at the beginning and end of the comparative period;
• Capital management disclosures (this exemption is not available to a financial institution);
• All remaining IAS 1 disclosures must be applied.

IAS 1 paragraphs for which exemption is available: 10(d), 10(f), 16, 38A-D, 40A-D, 111, 134-6.

Other resources

Articles

• General presentation and disclosures (July 2020)
• General presentation and disclosures (January 2021)
• Financial statement disclosures provides more information on the disclosure initiative

Factsheets

• 2022 IFRS Accounts
  Provides more information on Classification of Liabilities as Current or Non-current amendment to IAS 1 and Disclosure of Accounting Policies amendment to IAS 1
• 2020 IFRS Accounts
  Provides more information on Definition of Material amendments to IAS 1 and Classification of Liabilities as Current or Non-current amendment to IAS 1

This page was last updated on 30 August 2022.

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