ACCA P2 (HKG) Corporate Reporting

HKAS 1 Presentation of Financial Statements

(revised 2007) 17 Oct 2008

Dr. Gary Leung

www.garyleung.hk

Introduction

Phase A in presentation project

Limited impact

Effective: annual periods beginning on

or after 1 Jan 2009

Notes- only include the changes in

format of financial statements 2

Key changes Titles of financial statements

– “Balance Sheet” will become “Statement of financial position”

– “Income statement” will become “ Statement of comprehensive income”

– “Cash flow statement” will be come “Statement of cash flows”

– “Statement of changes in equity remains unchanged. Disclose income tax relating to each component of other

comprehensive income. Disclose reclassification adjustments relating to components

of other comprehensive income.

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Financial Statements A complete set of financial statements includes

– Statement of financial position– Statement of comprehensive income, this will

include; • Profit or loss for the period, and• Other comprehensive income recognised in the period.

– A statement of changes in equity– Statement of cash flows– Accounting policies and explanatory notes.

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Statement of Financial Position Present a statement of financial position

(balance sheet) as at the beginning of the earliest comparative period in a complete set of financial statements when the entity applies an accounting policy retrospectively or makes a retrospective restatement. (i.e. 3 years’ balance sheet)

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Statement of Comprehensive Income

All items of income and expense recognised in a period must be presented either:– in a single statement of comprehensive income; or– in two statements:

• a statement displaying components of profit or loss (separate income statement); and

• a second statement beginning with profit or loss and displaying components of other comprehensive income.

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Statement of Comprehensive Income

Comprehensive income for a period includes profit or loss for that period plus other comprehensive income recognised in that period. The components of other comprehensive income include:– Changes in revaluation surplus (HKAS 16 & HKAS 38)– Actuarial gains and losses on defined benefit plans

recognised in accordance with paragraph 93A of HKAS 19– Gains and losses arising from translating the financial

statements of a foreign operation or from functional to presentation currency (HKAS 21)

– Gains and losses on remeasuring available-for-sale financial assets (HKAS 39)

– The effective portion of gains and losses on hedging instruments in cash flow hedge (HKAS 39)

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Other comprehensive income Components of other comprehensive

income may be presented either:– net of related tax effects; or– before related tax effects with one amount

shown for the aggregate amount of related tax effects.

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Statement of Changes in Equity An entity should present as a separate component of its financial

statements, a statement showing:– total comprehensive income for the period, showing separately

the total amounts attributable to owners of the parent and to minority interest;;

– for each component of equity, the effects of retrospective application or retrospective restatement (per HKAS 8);

– the amounts of transactions with owners in their capacity as owners, showing separately contributions and distributions; and

– for each component of equity, a reconciliation between the carrying amount at the beginning and the end of the period, disclosing each change separately.

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