Statement of Comprehensive Income

Items excluded from profit or loss (not recognized as revenue but as other comprehensive income):
1. Revaluation surplus
2. Gains and losses arising from translating the financial statements of a foreign operation
3. Gains or losses on remeasuring available-for-sale financial assets (on investments designated or
measured at FVOCI)
4. Correction of errors
5. Effect of changes in accounting policies (changes in accounting estimates is under profit or loss)

Items that call for reclassification adjustment:

1. Disposal of foreign operation
2. Derecognition of debt instruments measured at FVOCI
3. Cash flow hedge becomes ineffective or affects profit or loss

Effect
Reclassification Adjustment
P/L OCI
Reclassification loss - +
Reclassification gain + -
*adjusted to retained earnings

Items that are part of the notes but not in the statement of comprehensive income:
1. Write-down of inventories to net realizable value or of property, plant, and equipment to
recoverable amount, as well as reversal of such write-down
2. Restructuring of the activities of an entity and reversals of any provisions for the cost
restructuring
3. Disposal of items of property, plant, and equipment
4. Disposal of investments
5. Discontinued operations
6. Litigation settlements
7. Other reversal of provisions

Statement of Changes in Equity

Statement of changes in equity shows the following info:

1. Effect of change in
a. Accounting policy (retrospective application)
b. Correction of prior period (retrospective restatement)
- Retrospective application and retrospective restatements are presented in the
statement of changes in equity as adjustments to the opening balance of retained
earnings rather than changes in equity during the period.
2. Total comprehensive income
a. Profit or loss
b. Other comprehensive income
3. Reconciliation between the beginning balances, year transactions, and ending balances
a. Profit or loss -> Retained earnings
b. Other comprehensive income -> Revaluation surplus
c. Transactions with owners -> Share capital
- Disclosure of dividends can be in the notes or as a reduction to retained earnings

Statement of Cash Flows

- Provides information about the sources and utilization of cash and cash equivalents for the period

1. Operating Activities (affects profit or loss)

a. Cash receipts from sale and services
b. Cash payments for purchases
c. Cash payments for operating expenses
 d. Cash receipts and payments from contracts held for trading purposes (buying and selling
held for trading securities)
e. Taxes – unless identified separately
2. Investing Activities (affects non-current assets)
a. Cash receipt and payments in acquisition or disposal of PPE, investment property, and
intangible assets
b. Cash receipt and payment in the acquisition and sale of equity or debt instruments of
other entities
c. Loans to other parties and collections (trading)
3. Financing Activities (affects borrowings and equity)
a. Cash receipts of issuance of shares and cash payments to redeem them (treasury
shares)
b. Cash receipts from issuing notes, loans, bonds, and mortgage payable
c. Cash payments by a lessee for the reduction of the outstanding liability relating to the
lease
Non-Current Assets Held for Sale (PFRS 5)
Assets classified as noncurrent in accordance with PAS1 are classified as current assets only if they meet
the criteria to be classified as held for sale under PFRS5.

Scope of PFRS 5
1. Property, plant, and equipment
2. Investment property measured under the cost model
3. Investment in associate, subsidiary, or joint venture
4. Intangible assets

Criteria to be classified as noncurrent held for sale

1. If its carrying amount will be recovered principally through a sale transaction rather than a
continuing use.

Conditions for classification

1. The noncurrent asset or disposal group is available for immediate sale in its present condition
subject only to terms that are usual and customary
2. The sale is highly probable, as evidenced by the existence of all of the following:
a. The entity’s management is committed on selling the asset
b. The entity is actively locating a buyer
c. The sale price is reasonable in relation to the asset’s (or disposal group’s) current fair
value
d. The sale is expected to be completed within one year from the date of classification
Exception:
- Delay is caused by events beyond the entity’s control
- Evidence that the management remains committed on selling the asset
e. Plan to sell is unlikely to be withdrawn

Measurement
Lower of carrying amount and fair value less costs to sell
- PPE is not depreciated while being held for sale
o In case of reversal, depreciate the PPE from the time it was classified as held for sale up
to the date of reversal
- The gain on reversal of impairment is recognized only to the extent of cumulative impairment
losses that have previously recognized (lowest).

Measurement of disposal group

Disposal Group – a group of assets held for sale (combination of inventory, equipment, a/r)
- Disposal group classified as held for sale shall be measured in accordance with respective
applicable PFRS on the items in the disposal group before measuring under PFRS 5

Discontinued operations
1. A component of an entity that either has been disposed of or is classified as held for sale
a. Represents a major line of business or geographical area of operations
b. Is part of a single coordinated plan to dispose of a separate major line of business or
geographical area of operations
c. Is a subsidiary acquired exclusively with a view to resale
2. Discontinued operations occur when:
a. A company eliminates (or will eliminate) the results of operations and cash flows of a
component of an entity from its ongoing operations
b. There is no significant continuing involvement in the component after disposal
3. Presentation
a. Result of discontinued operation is presented separately from continuing operations.
Net Income or loss of the discontinued operation is presented after profit or loss of
continuing operations and is not part of the entity’s revenue.
Notes – Part 1

PAS1 provides the following specific objectives of notes:

1. To present information about the basis of preparation of the financial statements and the
specific accounting policies used
2. To disclose the information required by PFRS that is not presented in the financial statements
3. To provide additional information that is not presented in the financial statements, but is
relevant to an understanding of any of them

Structure of Notes
1. General information on the reporting entity
2. Statement of compliance with the PFRS and basis of preparation of financial statements
3. Summary of significant accounting policies (recognition criteria, measurement bases,
derecognition, transitional provisions, etc.)
4. Disaggregations (breakdowns) of the line items in the other financial statements and other
supporting information
5. Other disclosures required by PFRS
6. Other disclosures that the management think is necessary to include in the notes

Accounting Policies
1. Hierarchy of reporting standards
a. PFRS
b. Judgemet
i. Management SHALL consider the following:
1. Requirements in other PFRS dealing with similar transactions
2. Conceptual framework
ii. Management may consider the following:
1. Pronouncements issued by other standard-setting bodies
2. Other accounting literature and industry practices
2. Changes in accounting policies
a. Permitted by PAS8 only if:
i. It is required by a PFRS
ii. Results in reliable and more relevant information
b. Examples:
i. FIFO to Weighted Average
ii. Cost model to Fair value model of measurement of investment property