Question

Identify the key financial statements required by the IFRS for reporting to stockholders.

Answer 1

A complete set of IFRS financial statements is required to include:

• Statement of financial position (balance sheet) as at the end of the period;
• Statement of comprehensive income for the period. This may be presented as a single statement or in two components; an income statement (profit and loss account) and a statement of other comprehensive income. The statement of other comprehensive income would include gains or losses on property, plant and equipment and gains or losses arising from the translation of financial statements of foreign operations;
• Statement of changes in equity for the period;
• Statement of cash flows for the period;
• Notes including a summary of significant accounting policies.

An entity which has changed an accounting policy must also include a statement of financial position (balance sheet) for the beginning of the comparative period.

Comparative information is provided for the previous reporting period. An entity preparing IFRS accounts for the first time must apply IFRS in full for the current and comparative period although there are transitional exemptions.

Also, IFRS standards require only two years of data for the income statements, changes in equity, and cash flow statements.

The ultimate parent (holding company) of a group must present consolidated financial statements including all of its subsidiaries. A 'subsidiary' is an entity which is controlled by its parent. An investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.

When preparing consolidated financial statements, an entity must use uniform accounting policies for reporting like transactions and other events in similar circumstances. Intragroup balances and transactions must be eliminated.