Question

The IASB outlined its requirements for the presentation of the income statement in IAS No. 1, “Framework for the Preparation and Presentation of Financial Statements”

Required:

a. What is the objective of IAS No. 1?

b. What income information does IAS No. 1 required to be presented?

c. What are the allowable methods for presenting that information?

Answer 1

IAS No.1 Presentation of Financial Statements sets out the requirement for Presentation and Preparation of Financial Statements.

a. OBJECTIVE:

Prescribe the basis for matters such as Minimum Disclosure, Additonal Information, Structure of Various Matters, Comparability with previous years and othe firms, Going Concern and Accrual Basis requirements etc.

b.INCOME INFORMATION:

Financial Statement includes:

a.Statement of Financial Position(Balance Sheet) - Information as to Assets and Liabilities

b. Statement of Profit and Loss and Other Comprehensive Income - Information as to Revenue and Costs, Gains and Losses

c.Statement of Changes in Equity - Information as to Changes in Ownership

d. Statement of Cash Flows - Information as to Cash Inflows and Outflows from different activities

e.Notes to Financial Statements - Additional and Explanatory Information

Statement of Profit and Loss shows the Income Information such as Revenue,Other Income,Cost of goods sold,expenses etc.

It must show:

• profit or loss for the period
• other comprehensive income
• total comprehensive income for the period
• an allocation of profit or loss and comprehensive income for the period between non-controlling interests and owners of the parent.

C.

An entity has a choice of presenting:

• a single statement of profit or loss and other comprehensive income, with profit or loss and other comprehensive income presented in two sections, or
• two statements:
  • a separate statement of profit or loss
  • a statement of comprehensive income, immediately following the statement of profit or loss and beginning with profit or loss