Financial Statement Presentation

Fair presentation
Complete set of financial statements

Going Concern
Accrual
Comparatives

Consistency

 Not record unrealized gain

Record the realizable value

ex. Land 10 impaired and the cost is 7m

Investment in listed shares should b recorded at fair

value
Historical cost if not listed

Going Concern

no future benefit expense

with future benefit -asset

 Borrowing cost like interest

in the period they are incurred

But for borrowing in relation to constructiom

capitalized as part of the cost of the assets

Qualifying Assets it takes substantial time before it can
be used for intended purpose
No. of years to be amortized ex. 5 years
2 years to be capitalized for interest to be capitalized is
only for 2 years to construct the building
for Cars 1.5k Cost interest 500k record only as asset is 1.5
because car is not a qualifying assets

Borrowing Costs
Borrowing costs are recognized as expense immediately.
Borrowing costs incurred in connection with the construction

of qualifying assets may be capitalized as part of the cost of the

asset

Foreign Exchange
Transaction is translated into functional currency at the spot

rate at the date of the transaction

Monetary assets and liabilities are translated using the closing

rate as of the FS date.

Foreign currency transaction

Buy equipment in dollar and

on account
dr. equipment 47 m
A/P - 47m
Exchange rate during the time it
was bought
Upon payment:
A/P
47
Foreign Currency 13
Cash
60

Dec 31 prepare fs
Use current foreigncy rate
Dr. A/P 47

Cash
45
Foreign Currency Gain 2

 Purchase of computerized system- capitalized

If develop computer system record as expenses immediately

Employee Benefits
Employee benefits are recognized as expense (or part of the

cost of assets) when incurred.

Retirement benefit expense includes:
Current service costs
Interest costs
Amortized past service costs
Expected return on plan assets
Actuarial Gains and Losses

Past Service Costs

Vested- recognize immediately
Unvested- to be amortized

Employees benefits
Actuarial Computation

FS PRESENTATION

7641 RA

OPERATION AND BALANCE

SET UP PLAN ASSET

SHEET
NET DIFFERENCE PLAN
AND OBLIGATION

DEFINED BENEFIT

OBLIGATION
CURRENT SERVICE COST-

EARNED BENEFIT DURING

THE YEAR BY THE
EMPLOYEE

NET PENSION ASSET OR

LIABILITY
EXPENSES IN THE INCOME
STATEMENT
Retirement benefit expense

 Past service cost

changes in the plan

If there is an increase from 1 m to 2 m so the expense recorded is
understated
1) Recognized asap as expense or
2) Amortized over the vested period or the time of the
retirement of the employee

Biological assets
Biological assets are living plants and animals.
Initial measurement- Cost
Subsequent measurement

Cost less accumulated depreciation and impairment losses

Lower of cost and estimated selling price less cost to sell and cost to
complete

Biological asset
Cost model
Accounting is at cost
All expenses related to the

biological assets form part of

the cost or should be
capitalized

Investment Property
Investment property shall be accounted for using

the cost-depreciation-impairment model.

For capital appreciation or rental only for real
property

Property, plant and equipment

PPE shall be accounted for using the Cost

Model
Revaluation of land is allowed but subject to the
approval of CDA
Tangible
Not intended for sale
With life of more than one year

Used in the operation of the coop

PPE
Major cost of repair should be

capitalized to form part of the

original amount less
accumulated depreciation
Dr. Accum Depn 40k
Cr.Equipt
40K
Dr. Equipt 40k
Cr. Cash
40K

Intangible Assets
Organizational costs are recognized as expense immediately
Research and development costs are recognized as expense

immediately
All intangible assets shall be amortized

Impairment of Assets
Recognize impairment loss as the excess of carrying amount

and recoverable amount

Impairment loss and reversals are recognized in Statement of

Operations

Investment In Associates and

Joint Venture
Initially recognized at Cost
Subsequently presented in the Statement of Financial Position

at Cost less Accumulated Impairment Losses

Recognize impairment loss when there is an indication that

the investment is impaired

More than 20% of the total capital

Provisions and Contingencies

Provision is recognized when
the entity has a present obligation;
it is probable that an outflow of economic resources will be required;
and
a reliable estimate of the amount of obligation can be made
Contingent assets and liabilities are not recognized
Estimated liabilities

Provision for liabilities

- sure to happen

- uncertainty as to the amount

- and when to be paid Ex. Warranty for sold items like

car

Inventories
Initially recognized at Cost
Subsequently measured at the lower of
Cost and
Estimated Selling Price less Costs to Complete and Sell
Cost is determined using
Specific Identification
FIFO

Leases
Operating Lease
Rental income/expense is recognized on a straight-line basis over
the lease term.
Advance rent is recognized as a liability
LEASE TO OWN recorded as installment receivable

Finance Lease
Rental payments are treated as installment payments for the
acquisition of asset
Depreciation and interest expense is recognized by the lessee
Transfer of assets during the lease agreement
Option to buy during the end of the term

LEASES
INCREASE OF YEARLY

Dr. Cash 1.0

RENTAL

LEASE AGREEMENT

TOTAL PAYMENT OF THE

YEARS TERM
EXAMPLE 10 MILLION FOR 5
YEARS
2.5 TO BE RECORDED
YEARLY
Dr. Rent Epense 2.5
Cr. Cash

Payable

1.0
1.5

Rent Recble 1.5

Rental Income 2.5

Impairment of assets
An impairment loss is recognized in P&L whenever the

carrying amount of an asset is greater than its recoverable

amount.

Revenue
Sale of goods- upon delivery
Sale of services- when services are performed

Interest revenue- earned and collected

Dividends revenue- when declared
Revenue means total sales regular source of income

Gain for a certain transaction

Financial instruments
Debt instruments at amortized cost
Short-term debt instruments- undiscounted amount
Investments in publicly- traded securities at fair value

with changes in fair value recognized in profit and loss

Investments in non publicly-traded securities mutual
funds, as well as other externally-managed funds at cost
less impairment

Donations and grants

Donations and grants are treated as increase in

equity

Donations in the form of PPE shall be recognized

as income over the life of the asset
Donations for working capital purposes shall
remain in the equity

Accounting changes
Accounting estimates- current and prospective
Change in accounting policy- current
Correction of prior-period errors- current (use Prior Period

Adjustment Account in the Statement of Operations)

Statement of Financial Condition

Cash and cash equivalents

Trade and other payables

Trade and other receivables

Financial liabilities

Financial assets

Liabilities/Assets for current taxes

Inventories

Deferred tax liabilities/assets

Property, plant and equipment

Provisions

Investment property

Members share capital

Intangible assets

Donation and grants

Biological assets carried at cost less

accumulated depreciation

Statutory funds

Investment in associates
Investment in jointly controlled

entities

Revaluation surplus

Statement of Operations

Revenue
Cost of sales/services
Marketing costs
Administrative costs
Finance costs
Other income and expenses
Tax expense (if applicable)
Allocation of distribution of net
surplus among:
Statutory fynds

Interest on share capital

Patronage refund

Statement of Cash Flows

Classify changes in cash and cash equivalents for a period as
to operating, investing or financing activities
Cash flows must be split into operating, investing and
financing activities.
Operating activities may be presented using either the direct
or indirect approach.
Disclose interest on share capital and patronage refund paid
Disclose other interest paid and received.

Statement of Changes in Equity

Show a reconciliation between the carrying amount at the
beginning and the end of the period, separately disclosing
changes resulting from:
Amounts of investments by, and distributions to, members,
showing separately issues of shares , and treasury share
transactions
Donations and grants
Movements in Statutory Funds (includes allocation of Net
Surplus as reconciled with amounts per Statement of
Operations)
Movements in revaluation surplus

STATUTORY FUNDS
Reserve Fund
At least 10% of the Net Surplus
New Cooperatives should allocate 50% of its net surplus
for the first 5 years
Cooperative Education and Training Fund
Not more than 10% of the Net Surplus
Community Development Fund
Not less than 3% of Net Surplus
Optional Fund
Not more than 7% of the Net Surplus

Distribution of Surplus and

Movements in Statutory Funds
Distribution of the Net Surplus to Statutory funds,
Interest on Share Capital and Patronage Refund must
be presented in the Statement of Operations

Movements in Statutory Funds should be presented in

the Statement of Changes in Equity

EFFECTIVE DATE
Effective for Financial Statements Period ending on or
after December 31, 2016