4.

0 Presentation of Financial Statements

IAS 1 – Presentation of Financial Statements

IAS 8 – Accounting Policies, Changes in Accounting Estimates and Errors
IAS 10 – Events after the Reporting Period
IAS 7 – Statement of Cash Flows
IAS 18 – Revenues
IFRS 15 – Revenue from contracts with Customers
IAS 24 – Related Party Disclosures

4.1 Statement of Financial Position

4.2 Statement of Comprehensive Income
4.3 Statement of Cash Flows

 Definition
Integral part of financial statements
Summarizes operating, investing, and financing activities
Provides information about cash receipts and cash payments
 Classification of cash flows
- Operating activities

Derived primarily from principal revenue producing activities. Those that

enter into the determination of net income or loss.

- Investing activities

Derived from acquisition and disposal of long-term assets and other

investments not included in cash equivalent.
Cash flows from transaction involving non-operating assets

- Financing activities

Derived from equity capital and borrowings of the entity

Transactions involving entity & owners and entity & creditors Commented [r1]: Entity financing
Involving nontrade liabilities and equity Commented [r2]: Debt financing

Noncash activities – investing and financing transactions that do not require

use of C / CE shall be excluded from statement of cash flows. Shall be disclosed
in notes or separate schedule.

Interest – SHALL be classified as operating cash flows because they enter into
the determination of net income or loss. ALTERNATIVELY interest paid may be
classified as financing cash flow and interest received may be classified as
investing cash flow.

Dividends – SHALL be classified as operating cash flows. ALTERNATIVELY

dividend received may be classified as investing cash flows and dividend paid
may be classified as financing cash flows.

Income taxes – SHALL be separately disclosed as cash flows arising from

operating activities unless they can be specifically identified with investing and
financing.
 Direct and indirect method
IAS 7 provides entity shall report cash flows from operating activities using either
direct or indirect method. Provides that entities are encouraged to report cash
flow from operating activities using the direct method

- Direct method shows in detail or itemizes major classes of gross receipts

and payments. Considered as ’cash basis’ income statement.

Computation of collections
Trade AR and NR, beg xx
Add: sales (accrual basis) xx
Total xx
Less: trade AR and NR, end (xx)
Collection of AR and NR xx

Computation of payment to merchandise creditors

Trade AP and NP, beg xx
Add: purchases (accrual basis) xx
Total xx
Less: trade AP and NP, end (xx)
Payment to merchandise creditors xx
Computation of payments for expenses
Expenses (Accrual) xx
Add: Prepaid expenses, end xx
Accrues expenses, beg xx
Total xx
Less: Prepaid expenses, beg (xx)
Accrued expenses, end (xx)
Expenses paid xx

Computation of collection of other income

Income other than sale (Accrual) xx
Add: Deferred income, end xx
Accrued income, beg xx
Total xx
Less: Deferred income, beg (xx)
Accrued income, end (xx)
Collection of other income xx
- Indirect method
4.4 Statement of Changes in Equity
4.5 Notes to the Financial Statements