Topic list Syllabus reference

Statement of financial position example

The example given by IAS 1 is as follows.	(IAS 1: IG)
GENERIC GROUP - STATEMENT OF FINANCIAL POSITION AT 31 DECEMBER
	20X7	20X6
Assets	$000	$'000
Non-current assets
Property, plant and equipment	350,700	360,020
Goodwill	80,800	91,200
Other intangible assets	227,470	227,470
Investments in associates	100,150	110,770
Investments in equity instruments	142,500	156,000
	901,620	945,460
Current assets
Inventories	135,230	132,500
Trade receivables	91,600	110,800
Other current assets	25,650	12,540
Cash and cash equivalents	312,400	322,900
	564,880	578,740
Total assets	1,466,500	1,524,200
Equity and liabilities
Equity attributable to owners of the parent
Share capital	650,000	600,000
Retained earnings	243,500	161,700
Other components of equity	10,200	21,200
	903,700	782,900
Non-controlling interest	70,050	48,600
Total equity	973,750	831,500
Non-current liabilities
Long-term borrowings	120,000	160,000
Deferred tax	28,800	26,040
Long-term provisions	28,850	52,240
Total non-current liabilities	177,650	238,280
Current liabilities
Trade and other payables	115,100	187,620
Short-term borrowings	150,000	200,000
Current portion of long-term borrowings	10,000	20,000
Current tax payable	35,000	42,000
Short-term provisions	5,000	4,800
Total current liabilities	315,100	454,420
Total liabilities	492,750	692,700
Total equity and liabilities	1,466,500	1,524,200

IAS 1 (revised) specifies various items which must appear on the face of the statement of financial position as a minimum disclosure.

1. 
   Property, plant and equipment (Chapter 3)
   
2. 
   Investment property (Chapter 3)
   
3. 
   Intangible assets (Chapter 4)
   
4. 
   Financial assets (excluding amounts shown under (e), (h) and (i)) (Chapter 11)
   
5. 
   Investments accounted for using the equity method (Chapter 11)
   
6. 
   Biological assets (Chapter 14)
   
7. 
   Inventories (Chapter 14)
   
8. 
   Trade and other receivables
   
9. 
   Cash and cash equivalents (Chapter 21)
   
10. 
    Assets classified as held for sale under IFRS 5 (Chapter 17)
    
11. 
    Trade and other payables
    
12. 
    Provisions (Chapter 13)
    
13. 
    Financial liabilities (other than (j) and (k)) (Chapter 11)
    
14. 
    Current tax liabilities and assets as in IAS 12 (Chapter 15)
    
15. 
    Deferred tax liabilities and assets (Chapter 15)
    
16. 
    Liabilities included in disposal groups under IFRS 5 (Chapter 17)
    
17. 
    Non-controlling interests (Chapter 9)
    
18. 
    Issued capital and reserves (IAS 1: para. 54)
    

We will look at these items in the chapters marked.
Any other line items, headings or sub-totals should be shown on the face of the statement of financial position when it is necessary for an understanding of the entity's financial position. (IAS 1: para. 55) The example shown above is for illustration only (although we will follow the format in this Study Text). The IAS, however, does not prescribe the order or format in which the items listed should be presented. It simply states that they must be presented separately because they are so different in nature or function from each other.
Whether additional items are presented separately depends on judgements based on the assessment of the following factors.

1. 
   Nature and liquidity of assets and their materiality. Thus goodwill and assets arising from development expenditure will be presented separately, as will monetary/non-monetary assets and current/non-current assets.
   
2. 
   Function within the entity. Operating and financial assets, inventories, receivables and cash and cash equivalents are therefore shown separately.
   
3. 
   Amounts, nature and timing of liabilities. Interest-bearing and non-interest-bearing liabilities and provisions will be shown separately, classified as current or non-current as appropriate.
   

(IAS 1: para. 58)
The standard also requires separate presentation where different measurement bases are used for assets and liabilities which differ in nature or function. According to IAS 16, for example, it is permitted to carry certain items of property, plant and equipment at cost or at a revalued amount. (IAS 1: para. 59)

2. 
   Information presented either on the face of the statement of financial position or by note
   

Further sub-classification of the line items listed above should be disclosed either on the face of the statement of financial position or in the notes. The classification will depend upon the nature of the entity's operations. As well as each item being sub-classified by its nature, any amounts payable to or receivable from any group company or other related party should also be disclosed separately.
The sub-classification details will in part depend on the requirements of IFRSs. The size, nature and function of the amounts involved will also be important and the factors listed above should be considered. Disclosures will vary from item to item and IAS 1 gives the following examples.

1. 
   Property, plant and equipment are classified by class as described in IAS 16, Property, Plant and Equipment.
   
2. 
   Receivables are analysed between amounts receivable from trade customers, other members of the group, receivables from related parties, prepayments and other amounts.
   
3. 
   Inventories are sub-classified, in accordance with IAS 2 Inventories, into classifications such as merchandise, production supplies, materials, work in progress and finished goods.
   
4. 
   Provisions are analysed showing separately provisions for employee benefit costs and any other items classified in a manner appropriate to the entity's operations.
   
5. 
   Equity capital and reserves are analysed showing separately the various classes of paid in capital,
   

share premium and reserves. (IAS 1: para. 78)
The standard then lists some specific disclosures which must be made, either on the face of the statement of financial position or in the related notes.

1. 
   Share capital disclosures (for each class of share capital)
   

1. 
   Number of shares authorised
   
2. 
   Number of shares issued and fully paid, and issued but not fully paid
   
3. 
   Nominal value per share, or that the shares have no nominal value
   
4. 
   Reconciliation of the number of shares outstanding at the beginning and at the end of the year
   
5. 
   Rights, preferences and restrictions attaching to that class including restrictions on the distribution of dividends and the repayment of capital
   
6. 
   Shares in the entity held by the entity itself or by related group companies
   
7. 
   Shares reserved for issuance under options and sales contracts, including the terms and
   

amounts (IAS 1: para. 79)

2. 
   Description of the nature and purpose of each reserve within owners' equity (IAS 1: para. 79)
   

Some types of entity have no share capital, eg partnerships. Such entities should disclose information which is equivalent to that listed above. This means disclosing the movement during the period in each category of equity interest and any rights, preferences or restrictions attached to each category of equity interest. (IAS 1: para. 80)