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International Accounting Standard 1 — Presentation of Financial

Statements
IAS 1(revised 2007) is effective for annual reporting periods beginning on or after 1 January 2009,
with earlier adoption permitted. Where IAS 1(revised 2007) is adopted for an earlier accounting
period, that fact is required to be disclosed. See IAS 1(revised 2007).139 for transitional provisions.
See separate section of this Manual for the requirements of IAS 1(revised 2003) which is superseded
from the date of application of IAS 1(revised 2007).

Note that this section of the International Accounting Manual has also been updated to include the text of
Standards issued through May 2012.

IAS 1 Presentation of Financial Statements was issued by the International Accounting Standards Committee
in September 1997. It replaced IAS 1 Disclosure of Accounting Policies (originally approved in 1974), IAS 5
Information to be Disclosed in Financial Statements (originally approved in 1977) and IAS 13 Presentation of
Current Assets and Current Liabilities (originally approved in 1979).

In April 2001 the International Accounting Standards Board (IASB) resolved that all Standards and
Interpretations issued under previous Constitutions continued to be applicable unless and until they were
amended or withdrawn.

In December 2003 the IASB issued a revised IAS 1, and in August 2005 issued an Amendment to IAS 1—
Capital Disclosures.

IAS 1 and its accompanying documents were also amended by the following IFRSs:

l IFRS 5 Non-current Assets Held for Sale and Discontinued Operations (issued March 2004)

l Actuarial Gains and Losses, Group Plans and Disclosures (Amendments to IAS 19) (issued
December 2004)

l IFRS 7 Financial Instruments: Disclosures (issued August 2005)

l IAS 23 Borrowing Costs (as revised in March 2007).1

In September 2007 the IASB issued a revised IAS 1, with an effective date of 1 January 2009.

Since then, IAS 1 has been amended by the following IFRSs:

l Puttable Financial Instruments and Obligations Arising on Liquidation (Amendments to IAS 32

and IAS 1) (issued February 2008)2

l Improvements to IFRSs (issued May 2008).3

l Improvements to IFRSs (Issued April 2009).4

l IFRS 9 Financial Instruments (issued November 2009). 5

l Improvements to IFRSs (issued May 2010)6

l IFRS 9 Financial Instruments (issued November 2009)7

l IFRS 10 Consolidated Financial Statements (issued May 2011)8

l IFRS 11 Joint Arrangements (issued May 2011)9

l Annual Improvements to IFRSs 2009–2011 Cycle (issued May 2012)10

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The following Interpretations refer to IAS 1:

l SIC-7 Introduction of the Euro (issued May 1998 and subsequently amended)

l SIC-15 Operating Leases—Incentives (issued December 1998 and subsequently amended)

l SIC-25 Income Taxes—Changes in the Tax Status of an Entity or its Shareholders (issued
December 1998 and subsequently amended)

l SIC-29 Service Concession Arrangements: Disclosures (issued December 2001 and

subsequently amended)

l SIC-32 Intangible Assets—Web Site Costs (issued March 2002 and subsequently amended)

l IFRIC 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities (issued May
2004)

l IFRIC 14 IAS 19—The Limit on a Defined Benefit Asset, Minimum Funding Requirements and
their Interaction (issued July 2007)

l IFRIC 15 Agreements for the Construction of Real Estate (issued July 2008)11

l IFRIC 17 Distributions of Non-cash Assets to Owners (issued November 2008).12

l IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments (issued November 2009)13

International Accounting Standard 1 Presentation of Financial Statements (IAS 1) is set out in

paragraphs 1–140 and the Appendix. All the paragraphs have equal authority. IAS 1 should be
read in the context of its objective and the Basis for Conclusions, the Preface to International
Financial Reporting Standards and the Conceptual Framework for Financial Reporting. IAS 8
Accounting Policies, Changes in Accounting Estimates and Errors provides a basis for selecting
and applying accounting policies in the absence of explicit guidance.

Introduction
IN1 International Accounting Standard 1 Presentation of Financial Statements (IAS 1) replaces IAS 1
Presentation of Financial Statements (revised in 2003) as amended in 2005. IAS 1 sets overall requirements
for the presentation of financial statements, guidelines for their structure and minimum requirements for their
content.

Reasons for revising IAS 1

IN2 The main objective of the International Accounting Standards Board in revising IAS 1 was to aggregate
information in the financial statements on the basis of shared characteristics. With this in mind, the Board
considered it useful to separate changes in equity (net assets) of an entity during a period arising from
transactions with owners in their capacity as owners from other changes in equity. Consequently, the Board
decided that all owner changes in equity should be presented in the statement of changes in equity,
separately from non-owner changes in equity.
IN3 In its review, the Board also considered FASB Statement No. 130 Reporting Comprehensive Income
(SFAS 130) issued in 1997. The requirements in IAS 1 regarding the presentation of the statement of
comprehensive income are similar to those in SFAS 130; however, some differences remain and those are
identified in paragraph BC106 of the Basis for Conclusions.
IN4 In addition, the Board’s intention in revising IAS 1 was to improve and reorder sections of IAS 1 to make
it easier to read. The Board’s objective was not to reconsider all the requirements of IAS 1.

Main features of IAS 1

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IN5 IAS 1 affects the presentation of owner changes in equity and of comprehensive income. It does not
change the recognition, measurement or disclosure of specific transactions and other events required by
other IFRSs.
IN6 IAS 1 requires an entity to present, in a statement of changes in equity, all owner changes in equity. All
non-owner changes in equity (ie comprehensive income) are required to be presented in one statement of
comprehensive income or in two statements (a separate income statement and a statement of
comprehensive income). Components of comprehensive income are not permitted to be presented in the
statement of changes in equity.
IN7 IAS 1 requires an entity to present a statement of financial position 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, as defined in IAS 8 Accounting Policies, Changes in
Accounting Estimates and Errors, or when the entity reclassifies items in the financial statements.
IN8 IAS 1 requires an entity to disclose reclassification adjustments and income tax relating to each
component of other comprehensive income. Reclassification adjustments are the amounts reclassified to
profit or loss in the current period that were previously recognised in other comprehensive income.

IN9 IAS 1 requires the presentation of dividends recognised as distributions to owners and related amounts
per share in the statement of changes in equity or in the notes. Dividends are distributions to owners in their
capacity as owners and the statement of changes in equity presents all owner changes in equity.

Changes from previous requirements

IN10 The main changes from the previous version of IAS 1 are described below.

A complete set of financial statements

IN11 The previous version of IAS 1 used the titles ‘balance sheet’ and ‘cash flow statement’ to describe two
of the statements within a complete set of financial statements. IAS 1 uses ‘statement of financial position’
and ‘statement of cash flows’ for those statements. The new titles reflect more closely the function of those
statements, as described in the Framework (see paragraphs BC14–BC21 of the Basis for Conclusions).
IN12 IAS 1 requires an entity to disclose comparative information in respect of the previous period, ie to
disclose as a minimum two of each of the statements and related notes. It introduces a requirement to
include in a complete set of financial statements a statement of financial position as at the beginning of the
earliest comparative period whenever the entity retrospectively applies an accounting policy or makes a
retrospective restatement of items in its financial statements, or when it reclassifies items in its financial
statements. The purpose is to provide information that is useful in analysing an entity’s financial statements
(see paragraphs BC31 and BC32 of the Basis for Conclusions).

Reporting owner changes in equity and comprehensive income

IN13 The previous version of IAS 1 required the presentation of an income statement that included items of
income and expense recognised in profit or loss. It required items of income and expense not recognised in
profit or loss to be presented in the statement of changes in equity, together with owner changes in equity. It
also labelled the statement of changes in equity comprising profit or loss, other items of income and expense
and the effects of changes in accounting policies and correction of errors as ‘statement of recognised income
and expense’. IAS 1 now requires:

a. all changes in equity arising from transactions with owners in their capacity as owners (ie owner
changes in equity) to be presented separately from non-owner changes in equity. An entity is not
permitted to present components of comprehensive income (ie non-owner changes in equity) in
the statement of changes in equity. The purpose is to provide better information by aggregating
items with shared characteristics and separating items with different characteristics (see
paragraphs BC37 and BC38 of the Basis for Conclusions).

b. income and expenses to be presented in one statement (a statement of comprehensive income)

or in two statements (a separate income statement and a statement of comprehensive income),
separately from owner changes in equity (see paragraphs BC49–BC54 of the Basis for
Conclusions).

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c. components of other comprehensive income to be displayed in the statement of comprehensive

income.

d. total comprehensive income to be presented in the financial statements.

Other comprehensive income—reclassification adjustments and related tax

effects
IN14 IAS 1 requires an entity to disclose income tax relating to each component of other comprehensive
income. The previous version of IAS 1 did not include such a requirement. The purpose is to provide users
with tax information relating to these components because the components often have tax rates different from
those applied to profit or loss (see paragraphs BC65–BC68 of the Basis for Conclusions).
IN15 IAS 1 also requires an entity to disclose reclassification adjustments relating to components of other
comprehensive income. Reclassification adjustments are amounts reclassified to profit or loss in the current
period that were recognised in other comprehensive income in previous periods. The purpose is to provide
users with information to assess the effect of such reclassifications on profit or loss (see paragraphs BC69–
BC73 of the Basis for Conclusions).

Presentation of dividends
IN16 The previous version of IAS 1 permitted disclosure of the amount of dividends recognised as
distributions to equity holders (now referred to as ‘owners’) and the related amount per share in the income
statement, in the statement of changes in equity or in the notes. IAS 1 requires dividends recognised as
distributions to owners and related amounts per share to be presented in the statement of changes in equity
or in the notes. The presentation of such disclosures in the statement of comprehensive income is not
permitted (see paragraph BC75 of the Basis for Conclusions). The purpose is to ensure that owner changes
in equity (in this case, distributions to owners in the form of dividends) are presented separately from non-
owner changes in equity (presented in the statement of comprehensive income).

Presentation of items of other comprehensive income

IN17 [Effective for annual reporting periods beginning on or after 1 July 2012. Refer to paragraph 139J for
full effective date information.] In June 2011 the Board issued Presentation of Items of Other Comprehensive
Income (amendments to IAS 1). The amendments improved the consistency and clarity of the presentation of
items of other comprehensive income (OCI). The amendments also highlighted the importance that the Board
places on presenting profit or loss and OCI together and with equal prominence. As explained in paragraph
IN13, in 2007 IAS 1 was amended to require profit or loss and OCI to be presented together. The
amendments issued in June 2011 retained that requirement, but focused on improving how items of OCI are
presented.
IN18 [Effective for annual reporting periods beginning on or after 1 July 2012. Refer to paragraph 139J for
full effective date information.] The main change resulting from the amendments was a requirement for
entities to group items presented in OCI on the basis of whether they are potentially reclassifiable to profit or
loss subsequently (reclassification adjustments). The amendments did not address which items are
presented in OCI.
IN19 [Effective for annual reporting periods beginning on or after 1 July 2012. Refer to paragraph 139J for
full effective date information.] The amendments did not change the option to present items of OCI either
before tax or net of tax. However, if the items are presented before tax then the tax related to each of the two
groups of OCI items (those that might be reclassified and those that will not be reclassified) must be shown
separately.

International Accounting Standard 1 Presentation of Financial Statements

Objective
1 This Standard prescribes the basis for presentation of general purpose financial statements to ensure
comparability both with the entity’s financial statements of previous periods and with the financial statements
of other entities. It sets out overall requirements for the presentation of financial statements, guidelines for
their structure and minimum requirements for their content.

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Scope
2 An entity shall apply this Standard in preparing and presenting general purpose financial
statements in accordance with International Financial Reporting Standards (IFRSs).

Deloitte Guidance and Links

Q&A IAS 1(2007): 2-1 — FORMAT OF FINANCIAL STATEMENTS

3 Other IFRSs set out the recognition, measurement and disclosure requirements for specific transactions
and other events.
4 [Effective prior to 1 January 2013.] This Standard does not apply to the structure and content of
condensed interim financial statements prepared in accordance with IAS 34 Interim Financial Reporting.
However, paragraphs 15–35 apply to such financial statements. This Standard applies equally to all entities,
including those that present consolidated financial statements and those that present separate financial
statements as defined in IAS 27 Consolidated and Separate Financial Statements.

Deloitte Guidance and Links

Q&A IAS 1(2007): 4-1 — INDIVIDUAL AND CONSOLIDATED FINANCIAL STATEMENTS

4 [Effective for annual reporting periods beginning on or after 1 January 2013. Refer to paragraph 139H for
full effective date information.] This Standard does not apply to the structure and content of condensed
interim financial statements prepared in accordance with IAS 34 Interim Financial Reporting. However,
paragraphs 15–35 apply to such financial statements. This Standard applies equally to all entities, including
those that present consolidated financial statements in accordance with IFRS 10 Consolidated Financial
Statements and those that present separate financial statements in accordance with IAS 27 Separate
Financial Statements.
5 This Standard uses terminology that is suitable for profit-oriented entities, including public sector business
entities. If entities with not-for-profit activities in the private sector or the public sector apply this Standard,
they may need to amend the descriptions used for particular line items in the financial statements and for the
financial statements themselves.
6 Similarly, entities that do not have equity as defined in IAS 32 Financial Instruments: Presentation (eg
some mutual funds) and entities whose share capital is not equity (eg some co-operative entities) may need
to adapt the financial statement presentation of members’ or unitholders’ interests.

Definitions
7 The following terms are used in this Standard with the meanings specified:

General purpose financial statements (referred to as ‘financial statements’) are those intended to
meet the needs of users who are not in a position to require an entity to prepare reports tailored to
their particular information needs.

Impracticable Applying a requirement is impracticable when the entity cannot apply it after making
every reasonable effort to do so.

International Financial Reporting Standards (IFRSs) are Standards and Interpretations issued by the
International Accounting Standards Board (IASB). They comprise:

a. International Financial Reporting Standards;

b. International Accounting Standards;

c. IFRIC Interpretations; and

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d. SIC Interpretations.14

Material Omissions or misstatements of items are material if they could, individually or collectively,
influence the economic decisions that users make on the basis of the financial statements. Materiality
depends on the size and nature of the omission or misstatement judged in the surrounding
circumstances. The size or nature of the item, or a combination of both, could be the determining
factor.

Assessing whether an omission or misstatement could influence economic decisions of users, and so be
material, requires consideration of the characteristics of those users. The Framework for the Preparation and
Presentation of Financial Statements states in paragraph 25 that ‘users are assumed to have a reasonable
knowledge of business and economic activities and accounting and a willingness to study the information with
reasonable diligence.’ Therefore, the assessment needs to take into account how users with such attributes
could reasonably be expected to be influenced in making economic decisions.

[Effective prior to 1 July 2012.] Notes contain information in addition to that presented in the
statement of financial position, statement of comprehensive income, separate income statement (if
presented), statement of changes in equity and statement of cash flows. Notes provide narrative
descriptions or disaggregations of items presented in those statements and information about items
that do not qualify for recognition in those statements.

[Effective for annual reporting periods beginning on or after 1 July 2012. Refer to paragraph 139J for
full effective date information.] Notes contain information in addition to that presented in the
statement of financial position, statement(s) of profit or loss and other comprehensive income,
separate income statement (if presented), statement of changes in equity and statement of cash
flows. Notes provide narrative descriptions or disaggregations of items presented in those
statements and information about items that do not qualify for recognition in those statements.

Other comprehensive income comprises items of income and expense (including reclassification
adjustments) that are not recognised in profit or loss as required or permitted by other IFRSs.

The components of other comprehensive income include:

a. changes in revaluation surplus (see IAS 16 Property, Plant and Equipment and IAS 38 Intangible
Assets);

b. [Effective prior to 1 January 2013] actuarial gains and losses on defined benefit plans recognised
in accordance with paragraph 93A of IAS 19 Employee Benefits;

[Effective for annual reporting periods beginning on or after 1 January 2013. Refer to paragraph
139K for full effective date information.] remeasurements of defined benefit plans (see IAS 19
Employee Benefits);

c. gains and losses arising from translating the financial statements of a foreign operation (see IAS
21 The Effects of Changes in Foreign Exchange Rates);

d. [Effective prior to 1 January 2015.] gains and losses on remeasuring available-for-sale financial
assets (see IAS 39 Financial Instruments: Recognition and Measurement);

[Effective for annual reporting periods beginning on or after 1 January 2015. Refer to paragraph
139E added by IFRS 9(2009) for full effective date information.] gains and losses from
investments in equity instruments measured at fair value through other comprehensive income in
accordance with paragraph 5.4.4 of IFRS 9 Financial Instruments;

[Effective for annual reporting periods beginning on or after 1 January 2015. Refer to paragraph
139G added by IFRS 9(2010) for full effective date information.] gains and losses from
investments in equity instruments measured at fair value through other comprehensive income in
accordance with paragraph 5.7.5 of IFRS 9 Financial Instruments;

e. the effective portion of gains and losses on hedging instruments in a cash flow hedge (see IAS
39).

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f. [Effective for annual reporting periods beginning on or after 1 January 2015. Refer to paragraph
139G added by IFRS 9(2010) for full effective date information.] for particular liabilities
designated as at fair value through profit or loss, the amount of the change in fair value that is
attributable to changes in the liability’s credit risk (see paragraph 5.7.7 of IFRS 9).

Owners are holders of instruments classified as equity.

Profit or loss is the total of income less expenses, excluding the components of other comprehensive
income.

Reclassification adjustments are amounts reclassified to profit or loss in the current period that were
recognised in other comprehensive income in the current or previous periods.

Total comprehensive income is the change in equity during a period resulting from transactions and
other events, other than those changes resulting from transactions with owners in their capacity as
owners.

Total comprehensive income comprises all components of ‘profit or loss’ and of ‘other comprehensive
income’.

8 Although this Standard uses the terms ‘other comprehensive income’, ‘profit or loss’ and ‘total
comprehensive income’, an entity may use other terms to describe the totals as long as the meaning is clear.
For example, an entity may use the term ‘net income’ to describe profit or loss.
8A [Effective 1 January 2009. Refer to paragraph 139B for full effective information.] The following terms are
described in IAS 32 Financial Instruments: Presentation and are used in this Standard with the meaning
specified in IAS 32:

a. puttable financial instrument classified as an equity instrument (described in paragraphs 16A and
16B of IAS 32)

b. an instrument that imposes on the entity an obligation to deliver to another party a pro rata share
of the net assets of the entity only on liquidation and is classified as an equity instrument
(described in paragraphs 16C and 16D of IAS 32).

Financial statements
Purpose of financial statements
9 Financial statements are a structured representation of the financial position and financial performance of
an entity. The objective of financial statements is to provide information about the financial position, financial
performance and cash flows of an entity that is useful to a wide range of users in making economic decisions.
Financial statements also show the results of the management’s stewardship of the resources entrusted to it.
To meet this objective, financial statements provide information about an entity’s:

a. assets;

b. liabilities;

c. equity;

d. income and expenses, including gains and losses;

e. contributions by and distributions to owners in their capacity as owners; and

f. cash flows.

This information, along with other information in the notes, assists users of financial statements in predicting
the entity’s future cash flows and, in particular, their timing and certainty.

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Complete set of financial statements

10 [Effective prior to 1 July 2012.] A complete set of financial statements comprises:

a. a statement of financial position as at the end of the period;

b. a statement of comprehensive income for the period;

c. a statement of changes in equity for the period;

d. a statement of cash flows for the period;

e. notes, comprising a summary of significant accounting policies and other explanatory

information; and

f. a statement of financial position as at the beginning of the earliest comparative period

when an entity applies an accounting policy retrospectively or makes a retrospective
restatement of items in its financial statements, or when it reclassifies items in its
financial statements.

An entity may use titles for the statements other than those used in this Standard.

Deloitte Guidance and Links

Q&A IAS 1(2007): 10-1 — REQUIREMENT FOR AN ADDITIONAL STATEMENT OF FINANCIAL

POSITION

Q&A IAS 1(2007): 10-2 — ‘RECLASSIFICATION’ IN THE CONTEXT OF IAS 1(2007).10(f)

10 [Effective for annual reporting periods beginning on or after 1 July 2012. Refer to paragraph 139J
for full effective date information.] A complete set of financial statements comprises:

a. a statement of financial position as at the end of the period;

b. a statement of profit or loss and other comprehensive income for the period;

c. a statement of changes in equity for the period;

d. a statement of cash flows for the period;

e. notes, comprising a summary of significant accounting policies and other explanatory

information; and

f. a statement of financial position as at the beginning of the earliest comparative period when
an entity applies an accounting policy retrospectively or makes a retrospective restatement
of items in its financial statements, or when it reclassifies items in its financial statements.

An entity may use titles for the statements other than those used in this Standard. For example, an
entity may use the title ‘statement of comprehensive income’ instead of ‘statement of profit or loss
and other comprehensive income’.

10 [Effective for annual reporting periods beginning on or after 1 January 2013. Refer to paragraph
139L for full effective date information.] A complete set of financial statements comprises:

a. a statement of financial position as at the end of the period;

b. a statement of profit or loss and other comprehensive income for the period;

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c. a statement of changes in equity for the period;

d. a statement of cash flows for the period;

e. notes, comprising a summary of significant accounting policies and other explanatory

information;

ea. comparative information in respect of the preceding period as specified in paragraphs 38 and
38A; and

f. a statement of financial position as at the beginning of the preceding period when an entity
applies an accounting policy retrospectively or makes a retrospective restatement of items in its
financial statements, or when it reclassifies items in its financial statements in accordance with
paragraphs 40A–40D.

An entity may use titles for the statements other than those used in this Standard. For example, an
entity may use the title ‘statement of comprehensive income’ instead of ‘statement of profit or loss
and other comprehensive income’.

10A [Effective for annual reporting periods beginning on or after 1 July 2012. Refer to paragraph
139J for full effective date information.] An entity may present a single statement of profit or loss and
other comprehensive income, with profit or loss and other comprehensive income presented in two
sections. The sections shall be presented together, with the profit or loss section presented first
followed directly by the other comprehensive income section. An entity may present the profit or loss
section in a separate statement of profit or loss. If so, the separate statement of profit or loss shall
immediately precede the statement presenting comprehensive income, which shall begin with profit
or loss.
11 An entity shall present with equal prominence all of the financial statements in a complete set of
financial statements.

Deloitte Guidance and Links

Q&A IAS 1(2007): 11-1 — PRESENTATION OF ALL FINANCIAL STATEMENTS WITH EQUAL
PROMINENCE

12 [Effective prior to 1 January 2013.] As permitted by paragraph 81, an entity may present the components
of profit or loss either as part of a single statement of comprehensive income or in a separate income
statement. When an income statement is presented it is part of a complete set of financial statements and
shall be displayed immediately before the statement of comprehensive income.

12 [Effective for annual reporting periods beginning on or after 1 January 2013. Refer to paragraph 139J for
full effective date information.] [Deleted]

13 Many entities present, outside the financial statements, a financial review by management that describes
and explains the main features of the entity’s financial performance and financial position, and the principal
uncertainties it faces. Such a report may include a review of:

a. the main factors and influences determining financial performance, including changes in the
environment in which the entity operates, the entity’s response to those changes and their effect,
and the entity’s policy for investment to maintain and enhance financial performance, including its
dividend policy;

b. the entity’s sources of funding and its targeted ratio of liabilities to equity; and

c. the entity’s resources not recognised in the statement of financial position in accordance with
IFRSs.

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Deloitte Guidance and Links

Q&A IAS 1(2007): 13-1 — MANAGEMENT COMMENTARY

14 Many entities also present, outside the financial statements, reports and statements such as
environmental reports and value added statements, particularly in industries in which environmental factors
are significant and when employees are regarded as an important user group. Reports and statements
presented outside financial statements are outside the scope of IFRSs.

General features
Fair presentation and compliance with IFRSs
15 Financial statements shall present fairly the financial position, financial performance and cash
flows of an entity. Fair presentation requires the faithful representation of the effects of transactions,
other events and conditions in accordance with the definitions and recognition criteria for assets,
liabilities, income and expenses set out in the Framework. The application of IFRSs, with additional
disclosure when necessary, is presumed to result in financial statements that achieve a fair
presentation.
16 An entity whose financial statements comply with IFRSs shall make an explicit and unreserved
statement of such compliance in the notes. An entity shall not describe financial statements as
complying with IFRSs unless they comply with all the requirements of IFRSs.

Deloitte Guidance and Links

Q&A IAS 1(2007): 16-1 — STATEMENT OF COMPLIANCE WITH IFRSs

Q&A IAS 1(2007): 16-2 — NATIONAL LEGAL REQUIREMENTS

17 In virtually all circumstances, an entity achieves a fair presentation by compliance with applicable IFRSs.
A fair presentation also requires an entity:

a. to select and apply accounting policies in accordance with IAS 8 Accounting Policies, Changes in
Accounting Estimates and Errors. IAS 8 sets out a hierarchy of authoritative guidance that
management considers in the absence of an IFRS that specifically applies to an item.

b. to present information, including accounting policies, in a manner that provides relevant, reliable,
comparable and understandable information.

c. to provide additional disclosures when compliance with the specific requirements in IFRSs is
insufficient to enable users to understand the impact of particular transactions, other events and
conditions on the entity’s financial position and financial performance.

18 An entity cannot rectify inappropriate accounting policies either by disclosure of the accounting
policies used or by notes or explanatory material.
19 In the extremely rare circumstances in which management concludes that compliance with a
requirement in an IFRS would be so misleading that it would conflict with the objective of financial
statements set out in the Framework, the entity shall depart from that requirement in the manner set
out in paragraph 20 if the relevant regulatory framework requires, or otherwise does not prohibit, such
a departure.

20 When an entity departs from a requirement of an IFRS in accordance with paragraph 19, it shall
disclose:

a. that management has concluded that the financial statements present fairly the entity’s

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financial position, financial performance and cash flows;

b. that it has complied with applicable IFRSs, except that it has departed from a particular
requirement to achieve a fair presentation;

c. the title of the IFRS from which the entity has departed, the nature of the departure,
including the treatment that the IFRS would require, the reason why that treatment would
be so misleading in the circumstances that it would conflict with the objective of financial
statements set out in the Framework, and the treatment adopted; and

d. for each period presented, the financial effect of the departure on each item in the
financial statements that would have been reported in complying with the requirement.

21 When an entity has departed from a requirement of an IFRS in a prior period, and that departure
affects the amounts recognised in the financial statements for the current period, it shall make the
disclosures set out in paragraph 20(c) and (d).
22 Paragraph 21 applies, for example, when an entity departed in a prior period from a requirement in an
IFRS for the measurement of assets or liabilities and that departure affects the measurement of changes in
assets and liabilities recognised in the current period’s financial statements.
23 In the extremely rare circumstances in which management concludes that compliance with a
requirement in an IFRS would be so misleading that it would conflict with the objective of financial
statements set out in the Framework, but the relevant regulatory framework prohibits departure from
the requirement, the entity shall, to the maximum extent possible, reduce the perceived misleading
aspects of compliance by disclosing:

a. the title of the IFRS in question, the nature of the requirement, and the reason why
management has concluded that complying with that requirement is so misleading in the
circumstances that it conflicts with the objective of financial statements set out in the
Framework; and

b. for each period presented, the adjustments to each item in the financial statements that
management has concluded would be necessary to achieve a fair presentation.

24 For the purpose of paragraphs 19–23, an item of information would conflict with the objective of financial
statements when it does not represent faithfully the transactions, other events and conditions that it either
purports to represent or could reasonably be expected to represent and, consequently, it would be likely to
influence economic decisions made by users of financial statements. When assessing whether complying
with a specific requirement in an IFRS would be so misleading that it would conflict with the objective of
financial statements set out in the Framework, management considers:

a. why the objective of financial statements is not achieved in the particular circumstances; and

b. how the entity’s circumstances differ from those of other entities that comply with the
requirement. If other entities in similar circumstances comply with the requirement, there is a
rebuttable presumption that the entity’s compliance with the requirement would not be so
misleading that it would conflict with the objective of financial statements set out in the
Framework.

Going concern
25 When preparing financial statements, management shall make an assessment of an entity’s
ability to continue as a going concern. An entity shall prepare financial statements on a going
concern basis unless management either intends to liquidate the entity or to cease trading, or has no
realistic alternative but to do so. When management is aware, in making its assessment, of material
uncertainties related to events or conditions that may cast significant doubt upon the entity’s ability
to continue as a going concern, the entity shall disclose those uncertainties. When an entity does not
prepare financial statements on a going concern basis, it shall disclose that fact, together with the
basis on which it prepared the financial statements and the reason why the entity is not regarded as a

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going concern.

Deloitte Guidance and Links

Q&A IAS 1(2007): 25-1 — IMPAIRMENT OF ASSETS WHEN FINANCIAL STATEMENTS ARE NOT
PREPARED ON A GOING CONCERN BASIS

Q&A IAS 1(2007): 25-2 — RECOGNITION OF IMPAIRMENT WHEN DIRECTORS ARE CONSIDERING
CEASING TO TRADE

Q&A IAS 1(2007): 25-3 — ENTITIES BECOMING DORMANT

Q&A IAS 1(2007): 25-EX-1 — DEPARTURE FROM GOING CONCERN BASIS — EXAMPLE

Q&A IAS 1(2007): 25-4 — ENTITY ESTABLISHED AS DORMANT

Q&A IAS 1(2007): 25-5 — PREPARING FINANCIAL STATEMENTS ON A GOING CONCERN BASIS
WHEN THE ENTITY IS EXPERIENCING SEVERE FINANCIAL DIFFICULTIES

Q&A IAS 1(2007): 25-6 — CLASSIFICATION OF NON-CURRENT ASSETS AND LONG-TERM

LIABILITIES WHEN USING A BASIS OTHER THAN THAT OF A GOING CONCERN

Q&A IAS 1(2007): 25-7 — USING A BASIS OTHER THAN THAT OF A GOING CONCERN FOR
PREPARING FINANCIAL STATEMENTS

26 In assessing whether the going concern assumption is appropriate, management takes into account all
available information about the future, which is at least, but is not limited to, twelve months from the end of
the reporting period. The degree of consideration depends on the facts in each case. When an entity has a
history of profitable operations and ready access to financial resources, the entity may reach a conclusion
that the going concern basis of accounting is appropriate without detailed analysis. In other cases,
management may need to consider a wide range of factors relating to current and expected profitability, debt
repayment schedules and potential sources of replacement financing before it can satisfy itself that the going
concern basis is appropriate.
Accrual basis of accounting
27 An entity shall prepare its financial statements, except for cash flow information, using the
accrual basis of accounting.
28 When the accrual basis of accounting is used, an entity recognises items as assets, liabilities, equity,
income and expenses (the elements of financial statements) when they satisfy the definitions and recognition
criteria for those elements in the Framework.
Materiality and aggregation

29 An entity shall present separately each material class of similar items. An entity shall present
separately items of a dissimilar nature or function unless they are immaterial.
30 Financial statements result from processing large numbers of transactions or other events that are
aggregated into classes according to their nature or function. The final stage in the process of aggregation
and classification is the presentation of condensed and classified data, which form line items in the financial
statements. If a line item is not individually material, it is aggregated with other items either in those
statements or in the notes. An item that is not sufficiently material to warrant separate presentation in those
statements may warrant separate presentation in the notes.
31 An entity need not provide a specific disclosure required by an IFRS if the information is not material.
Offsetting
32 An entity shall not offset assets and liabilities or income and expenses, unless required or
permitted by an IFRS.
33 An entity reports separately both assets and liabilities, and income and expenses. Offsetting in the

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statements of comprehensive income or financial position or in the separate income statement (if presented),
except when offsetting reflects the substance of the transaction or other event, detracts from the ability of
users both to understand the transactions, other events and conditions that have occurred and to assess the
entity’s future cash flows. Measuring assets net of valuation allowances—for example, obsolescence
allowances on inventories and doubtful debts allowances on receivables—is not offsetting.

Deloitte Guidance and Links

Q&A IAS 1(2007): 33-1 — OFFSETTING REVENUE AND EXPENSES WHEN GOODS AND SERVICES
ARE SOLD AT COST

Q&A IAS 1(2007): 33-2 — OFFSETTING REVENUE AND EXPENSES FOR SHARED COMMISSIONS

Q&A IAS 1(2007): 33-3 — PRESENTATION OF WITHHOLDING TAX ON REVENUE FROM

INVESTMENTS

Q&A IAS 1(2007): 33-4 — PRESENTATION OF SHIPPING AND HANDLING COSTS BILLED TO
CUSTOMERS

34 IAS 18 Revenue defines revenue and requires an entity to measure it at the fair value of the
consideration received or receivable, taking into account the amount of any trade discounts and volume
rebates the entity allows. An entity undertakes, in the course of its ordinary activities, other transactions that
do not generate revenue but are incidental to the main revenue-generating activities. An entity presents the
results of such transactions, when this presentation reflects the substance of the transaction or other event,
by netting any income with related expenses arising on the same transaction. For example:

a. an entity presents gains and losses on the disposal of non-current assets, including investments
and operating assets, by deducting from the proceeds on disposal the carrying amount of the
asset and related selling expenses; and

b. an entity may net expenditure related to a provision that is recognised in accordance with IAS 37
Provisions, Contingent Liabilities and Contingent Assets and reimbursed under a contractual
arrangement with a third party (for example, a supplier’s warranty agreement) against the related
reimbursement.

35 In addition, an entity presents on a net basis gains and losses arising from a group of similar
transactions, for example, foreign exchange gains and losses or gains and losses arising on financial
instruments held for trading. However, an entity presents such gains and losses separately if they are
material.
Frequency of reporting

36 An entity shall present a complete set of financial statements (including comparative information)
at least annually. When an entity changes the end of its reporting period and presents financial
statements for a period longer or shorter than one year, an entity shall disclose, in addition to the
period covered by the financial statements:

a. the reason for using a longer or shorter period, and

b. the fact that amounts presented in the financial statements are not entirely comparable.

Deloitte Guidance and Links

Q&A IAS 1(2007): 36-1 — MEANING OF ‘ANNUAL’ FINANCIAL STATEMENTS

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37 Normally, an entity consistently prepares financial statements for a one-year period. However, for
practical reasons, some entities prefer to report, for example, for a 52-week period. This Standard does not
preclude this practice.
Comparative information
Minimum Comparative Information
38 [Effective prior to 1 January 2013.] Except when IFRSs permit or require otherwise, an entity shall
disclose comparative information in respect of the previous period for all amounts reported in the
current period’s financial statements. An entity shall include comparative information for narrative
and descriptive information when it is relevant to an understanding of the current period’s financial
statements.
38 [Effective for annual reporting periods beginning on or after 1 January 2013. Refer to paragraph
139L for full effective date information.] Except when IFRSs permit or require otherwise, an entity
shall present comparative information in respect of the preceding period for all amounts reported in
the current period’s financial statements. An entity shall include comparative information for
narrative and descriptive information if it is relevant to understanding the current period’s financial
statements.
38A [Effective for annual reporting periods beginning on or after 1 January 2013. Refer to paragraph
139L for full effective date information.] An entity shall present, as a minimum, two statements of
financial position, two statements of profit or loss and other comprehensive income, two separate
statements of profit or loss (if presented), two statements of cash flows and two statements of
changes in equity, and related notes.
38B [Effective for annual reporting periods beginning on or after 1 January 2013. Refer to paragraph 139L
for full effective date information.] In some cases, narrative information provided in the financial statements
for the preceding period(s) continues to be relevant in the current period. For example, an entity discloses in
the current period details of a legal dispute, the outcome of which was uncertain at the end of the preceding
period and is yet to be resolved. Users may benefit from the disclosure of information that the uncertainty
existed at the end of the preceding period and from the disclosure of information about the steps that have
been taken during the period to resolve the uncertainty.

Additional Comparative Information

38C [Effective for annual reporting periods beginning on or after 1 January 2013. Refer to paragraph 139L
for full effective date information.] An entity may present comparative information in addition to the minimum
comparative financial statements required by IFRSs, as long as that information is prepared in accordance
with IFRSs. This comparative information may consist of one or more statements referred to in paragraph 10,
but need not comprise a complete set of financial statements. When this is the case, the entity shall present
related note information for those additional statements.

38D [Effective for annual reporting periods beginning on or after 1 January 2013. Refer to paragraph 139L
for full effective date information.] For example, an entity may present a third statement of profit of loss and
other comprehensive income (thereby presenting the current period, the preceding period and one additional
comparative period). However, the entity is not required to present a third statement of financial position, a
third statement of cash flows or a third statement of changes in equity (ie an additional financial statement
comparative). The entity is required to present, in the notes to the financial statements, the comparative
information related to that additional statement of profit or loss and other comprehensive income.
39 [Effective prior to 1 January 2013.] An entity disclosing comparative information shall present, as a
minimum, two statements of financial position, two of each of the other statements, and related notes. When
an entity applies an accounting policy retrospectively or makes a retrospective restatement of items in its
financial statements or when it reclassifies items in its financial statements, it shall present, as a minimum,
three statements of financial position, two of each of the other statements, and related notes. An entity
presents statements of financial position as at:

a. the end of the current period,

b. the end of the previous period (which is the same as the beginning of the current period), and

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c. the beginning of the earliest comparative period.

Deloitte Guidance and Links

Q&A IAS 1(2007): 39-1 — IAS 1 AND APPLICATION OF THE REQUIREMENT FOR A THIRD
STATEMENT OF FINANCIAL POSITION TO REGULATORY FILINGS

Q&A IAS 1(2007): 39-2 — NOTE DISCLOSURES REQUIRED TO SUPPORT AN ADDITIONAL

STATEMENT OF FINANCIAL POSITION

39 [Effective for annual reporting periods beginning on or after 1 January 2013. Refer to paragraph 139L for
full effective date information.] [Deleted]
40 [Effective prior to 1 January 2013.] In some cases, narrative information provided in the financial
statements for the previous period(s) continues to be relevant in the current period. For example, an entity
discloses in the current period details of a legal dispute whose outcome was uncertain at the end of the
immediately preceding reporting period and that is yet to be resolved. Users benefit from information that the
uncertainty existed at the end of the immediately preceding reporting period, and about the steps that have
been taken during the period to resolve the uncertainty.
40 [Effective for annual reporting periods beginning on or after 1 January 2013. Refer to paragraph 139L for
full effective date information.] [Deleted]

Change In Accounting Policy, Retrospective Restatement Or Reclassification

40A [Effective for annual reporting periods beginning on or after 1 January 2013. Refer to paragraph
139L for full effective date information.] An entity shall present a third statement of financial position
as at the beginning of the preceding period in addition to the minimum comparative financial
statements required in paragraph 38A if:

a. it applies an accounting policy retrospectively, makes a retrospective restatement of items

in its financial statements or reclassifies items in its financial statements; and

b. the retrospective application, retrospective restatement or the reclassification has a

material effect on the information in the statement of financial position at the beginning of
the preceding period.

40B [Effective for annual reporting periods beginning on or after 1 January 2013. Refer to paragraph 139L
for full effective date information.] In the circumstances described in paragraph 40A, an entity shall present
three statements of financial position as at:

a. the end of the current period;

b. the end of the preceding period; and

c. the beginning of the preceding period.

40C [Effective for annual reporting periods beginning on or after 1 January 2013. Refer to paragraph 139L
for full effective date information.] When an entity is required to present an additional statement of financial
position in accordance with paragraph 40A, it must disclose the information required by paragraphs 41–44
and IAS 8. However, it need not present the related notes to the opening statement of financial position as at
the beginning of the preceding period.
40D [Effective for annual reporting periods beginning on or after 1 January 2013. Refer to paragraph 139L
for full effective date information.] The date of that opening statement of financial position shall be as at the
beginning of the preceding period regardless of whether an entity’s financial statements present comparative

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information for earlier periods (as permitted in paragraph 38C).

41 [Effective prior to 1 January 2013.] When the entity changes the presentation or classification of
items in its financial statements, the entity shall reclassify comparative amounts unless
reclassification is impracticable. When the entity reclassifies comparative amounts, the entity shall
disclose:

a. the nature of the reclassification;

b. the amount of each item or class of items that is reclassified; and

c. the reason for the reclassification.

Deloitte Guidance and Links

Q&A IAS 1(2007): 41-1 — IS ‘UNDUE COST OR EFFORT’ AN APPROPRIATE BASIS FOR
CONCLUDING THAT RETROSPECTIVE RECLASSIFICATION OF COMPARATIVE AMOUNTS IS
IMPRACTICABLE?

Q&A IAS 1(2007): 41-2 — IDENTIFICATION OF COMPARATIVE INFORMATION THAT HAS BEEN
RECLASSIFIED

41 [Effective for annual reporting periods beginning on or after 1 January 2013. Refer to paragraph
139L for full effective date information.] If an entity changes the presentation or classification of items
in its financial statements, it shall reclassify comparative amounts unless reclassification is
impracticable. When an entity reclassifies comparative amounts, it shall disclose (including as at the
beginning of the preceding period):

a. the nature of the reclassification;

b. the amount of each item or class of items that is reclassified; and

c. the reason for the reclassification.

42 When it is impracticable to reclassify comparative amounts, an entity shall disclose:

a. the reason for not reclassifying the amounts, and

b. the nature of the adjustments that would have been made if the amounts had been
reclassified.

43 Enhancing the inter-period comparability of information assists users in making economic decisions,
especially by allowing the assessment of trends in financial information for predictive purposes. In some
circumstances, it is impracticable to reclassify comparative information for a particular prior period to achieve
comparability with the current period. For example, an entity may not have collected data in the prior period
(s) in a way that allows reclassification, and it may be impracticable to recreate the information.
44 IAS 8 sets out the adjustments to comparative information required when an entity changes an
accounting policy or corrects an error.

Consistency of presentation
45 An entity shall retain the presentation and classification of items in the financial statements from
one period to the next unless:

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a. it is apparent, following a significant change in the nature of the entity’s operations or a

review of its financial statements, that another presentation or classification would be
more appropriate having regard to the criteria for the selection and application of
accounting policies in IAS 8; or

b. an IFRS requires a change in presentation.

46 For example, a significant acquisition or disposal, or a review of the presentation of the financial
statements, might suggest that the financial statements need to be presented differently. An entity changes
the presentation of its financial statements only if the changed presentation provides information that is
reliable and more relevant to users of the financial statements and the revised structure is likely to continue,
so that comparability is not impaired. When making such changes in presentation, an entity reclassifies its
comparative information in accordance with paragraphs 41 and 42.

Structure and content

Introduction
47 This Standard requires particular disclosures in the statement of financial position or of comprehensive
income, in the separate income statement (if presented), or in the statement of changes in equity and
requires disclosure of other line items either in those statements or in the notes. IAS 7 Statement of Cash
Flows sets out requirements for the presentation of cash flow information.
48 This Standard sometimes uses the term ‘disclosure’ in a broad sense, encompassing items presented in
the financial statements. Disclosures are also required by other IFRSs. Unless specified to the contrary
elsewhere in this Standard or in another IFRS, such disclosures may be made in the financial statements.

Identification of the financial statements

49 An entity shall clearly identify the financial statements and distinguish them from other
information in the same published document.
50 IFRSs apply only to financial statements, and not necessarily to other information presented in an annual
report, a regulatory filing, or another document. Therefore, it is important that users can distinguish
information that is prepared using IFRSs from other information that may be useful to users but is not the
subject of those requirements.
51 An entity shall clearly identify each financial statement and the notes. In addition, an entity shall
display the following information prominently, and repeat it when necessary for the information
presented to be understandable:

a. the name of the reporting entity or other means of identification, and any change in that
information from the end of the preceding reporting period;

b. whether the financial statements are of an individual entity or a group of entities;

c. the date of the end of the reporting period or the period covered by the set of financial
statements or notes;

d. the presentation currency, as defined in IAS 21; and

e. the level of rounding used in presenting amounts in the financial statements.

52 An entity meets the requirements in paragraph 51 by presenting appropriate headings for pages,
statements, notes, columns and the like. Judgement is required in determining the best way of presenting
such information. For example, when an entity presents the financial statements electronically, separate
pages are not always used; an entity then presents the above items to ensure that the information included in
the financial statements can be understood.

53 An entity often makes financial statements more understandable by presenting information in thousands
or millions of units of the presentation currency. This is acceptable as long as the entity discloses the level of
rounding and does not omit material information.

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Deloitte Guidance and Links

Q&A IAS 1(2007): 53-1 — DIFFERENT LEVELS OF ROUNDING FOR DIFFERENT DISCLOSURES IN
FINANCIAL STATEMENTS

Statement of financial position

Information to be presented in the statement of financial position
54 [Effective prior to 1 July 2009.] As a minimum, the statement of financial position shall include
line items that present the following amounts:

a. property, plant and equipment;

b. investment property;

c. intangible assets;

d. financial assets (excluding amounts shown under (e), (h) and (i));

e. investments accounted for using the equity method;

f. biological assets;

g. inventories;

h. trade and other receivables;

i. cash and cash equivalents;

j. the total of assets classified as held for sale and assets included in disposal groups
classified as held for sale in accordance with IFRS 5 Non-current Assets Held for Sale and
Discontinued Operations;

k. trade and other payables;

l. provisions;

m. financial liabilities (excluding amounts shown under (k) and (l));

n. liabilities and assets for current tax, as defined in IAS 12 Income Taxes;

o. deferred tax liabilities and deferred tax assets, as defined in IAS 12;

p. liabilities included in disposal groups classified as held for sale in accordance with IFRS
5;

q. minority interests, presented within equity; and

r. issued capital and reserves attributable to owners of the parent.

Deloitte Guidance and Links

Q&A IAS 1(2007): 54-1 — PRESENTATION IN THE STATEMENT OF FINANCIAL POSITION OF

CASH AND CASH EQUIVALENTS

54 [Effective for annual reporting periods beginning on or after 1 July 2009. If an entity applies IAS

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27 (revised 2008) for an earlier period, these amendments shall be applied for that earlier period.] As
a minimum, the statement of financial position shall include line items that present the following
amounts:

a. property, plant and equipment;

b. investment property;

c. intangible assets;

d. financial assets (excluding amounts shown under (e), (h) and (i));

e. investments accounted for using the equity method;

f. biological assets;

g. inventories;

h. trade and other receivables;

i. cash and cash equivalents;

j. the total of assets classified as held for sale and assets included in disposal groups
classified as held for sale in accordance with IFRS 5 Non-current Assets Held for Sale and
Discontinued Operations

k. trade and other payables;

l. provisions;

m. financial liabilities (excluding amounts shown under (k) and (l));

n. liabilities and assets for current tax, as defined in IAS 12 Income Taxes;

o. deferred tax liabilities and deferred tax assets, as defined in IAS 12;

p. liabilities included in disposal groups classified as held for sale in accordance with IFRS 5;

q. non-controlling interests, presented within equity; and

r. issued capital and reserves attributable to owners of the parent.

55 An entity shall present additional line items, headings and subtotals in the statement of financial
position when such presentation is relevant to an understanding of the entity’s financial position.
56 When an entity presents current and non-current assets, and current and non-current liabilities,
as separate classifications in its statement of financial position, it shall not classify deferred tax
assets (liabilities) as current assets (liabilities).
57 This Standard does not prescribe the order or format in which an entity presents items. Paragraph 54
simply lists items that are sufficiently different in nature or function to warrant separate presentation in the
statement of financial position. In addition:

a. line items are included when the size, nature or function of an item or aggregation of similar items
is such that separate presentation is relevant to an understanding of the entity’s financial position;
and

b. the descriptions used and the ordering of items or aggregation of similar items may be amended
according to the nature of the entity and its transactions, to provide information that is relevant to
an understanding of the entity’s financial position. For example, a financial institution may amend
the above descriptions to provide information that is relevant to the operations of a financial
institution.

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58 An entity makes the judgement about whether to present additional items separately on the basis of an
assessment of:

a. the nature and liquidity of assets;

b. the function of assets within the entity; and

c. the amounts, nature and timing of liabilities.

59 The use of different measurement bases for different classes of assets suggests that their nature or
function differs and, therefore, that an entity presents them as separate line items. For example, different
classes of property, plant and equipment can be carried at cost or at revalued amounts in accordance with
IAS 16.
Current/non-current distinction
60 An entity shall present current and non-current assets, and current and non-current liabilities, as
separate classifications in its statement of financial position in accordance with paragraphs 66–76
except when a presentation based on liquidity provides information that is reliable and more relevant.
When that exception applies, an entity shall present all assets and liabilities in order of liquidity.
61 Whichever method of presentation is adopted, an entity shall disclose the amount expected to be
recovered or settled after more than twelve months for each asset and liability line item that
combines amounts expected to be recovered or settled:

a. no more than twelve months after the reporting period, and

b. more than twelve months after the reporting period.

Deloitte Guidance and Links

Q&A IAS 1(2007): 61-1 — DISCLOSURE REQUIRED FOR DEFERRED TAX UNDER IAS 1(2007).61

62 When an entity supplies goods or services within a clearly identifiable operating cycle, separate
classification of current and non-current assets and liabilities in the statement of financial position provides
useful information by distinguishing the net assets that are continuously circulating as working capital from
those used in the entity’s long-term operations. It also highlights assets that are expected to be realised
within the current operating cycle, and liabilities that are due for settlement within the same period.
63 For some entities, such as financial institutions, a presentation of assets and liabilities in increasing or
decreasing order of liquidity provides information that is reliable and more relevant than a current/non-current
presentation because the entity does not supply goods or services within a clearly identifiable operating
cycle.
64 In applying paragraph 60, an entity is permitted to present some of its assets and liabilities using a
current/non-current classification and others in order of liquidity when this provides information that is reliable
and more relevant. The need for a mixed basis of presentation might arise when an entity has diverse
operations.
65 Information about expected dates of realisation of assets and liabilities is useful in assessing the liquidity
and solvency of an entity. IFRS 7 Financial Instruments: Disclosures requires disclosure of the maturity dates
of financial assets and financial liabilities. Financial assets include trade and other receivables, and financial
liabilities include trade and other payables. Information on the expected date of recovery of non-monetary
assets such as inventories and expected date of settlement for liabilities such as provisions is also useful,
whether assets and liabilities are classified as current or as non-current. For example, an entity discloses the
amount of inventories that are expected to be recovered more than twelve months after the reporting period.

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Current assets
66 An entity shall classify an asset as current when:

a. it expects to realise the asset, or intends to sell or consume it, in its normal operating
cycle;

b. it holds the asset primarily for the purpose of trading;

c. it expects to realise the asset within twelve months after the reporting period; or

d. the asset is cash or a cash equivalent (as defined in IAS 7) unless the asset is restricted
from being exchanged or used to settle a liability for at least twelve months after the
reporting period.

An entity shall classify all other assets as non-current.

Deloitte Guidance and Links

Q&A IAS 1(2007): 66-1 — PRESENTATION OF IMMATURE AGRICULTURAL PRODUCE IN THE

STATEMENT OF FINANCIAL POSITION

Q&A IAS 1(2007): 66-2 — NORMAL OPERATING CYCLE

67 This Standard uses the term ‘non-current’ to include tangible, intangible and financial assets of a long-
term nature. It does not prohibit the use of alternative descriptions as long as the meaning is clear.
68 [Effective prior to 1 January 2009.] The operating cycle of an entity is the time between the acquisition of
assets for processing and their realisation in cash or cash equivalents. When the entity's normal operating
cycle is not clearly identifiable, it is assumed to be twelve months. Current assets include assets (such as
inventories and trade receivables) that are sold, consumed or realised as part of the normal operating cycle
even when they are not expected to be realised within twelve months after the reporting period. Current
assets also include assets held primarily for the purpose of trading (financial assets within this category are
classified as held for trading in accordance with IAS 39) and the current portion of non-current financial
assets.

Deloitte Guidance and Links

Q&A IAS 1(2007): 68-1 — PRESENTATION OF DERIVATIVES NOT DESIGNATED IN A QUALIFYING

HEDGE ACCOUNTING RELATIONSHIP

68 [Effective for annual reporting periods beginning on or after 1 January 2009. Refer to paragraph 139C for
full effective information.] The operating cycle of an entity is the time between the acquisition of assets for
processing and their realisation in cash or cash equivalents. When the entity’s normal operating cycle is not
clearly identifiable, it is assumed to be twelve months. Current assets include assets (such as inventories and
trade receivables) that are sold, consumed or realised as part of the normal operating cycle even when they
are not expected to be realised within twelve months after the reporting period. Current assets also include
assets held primarily for the purpose of trading (examples include some financial assets classified as held for
trading in accordance with IAS 39) and the current portion of non-current financial assets.
68 [Effective for annual reporting periods beginning on or after 1 January 2015. Refer to paragraph 139E
added by IFRS 9(2009) for full effective date information.] The operating cycle of an entity is the time
between the acquisition of assets for processing and their realisation in cash or cash equivalents. When the
entity’s normal operating cycle is not clearly identifiable, it is assumed to be twelve months. Current assets
also include assets held primarily for the purpose of trading (examples include some financial assets that
meet the definition of held for trading in IAS 39) and the current portion of non-current financial assets.

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68 [Effective for annual reporting periods beginning on or after 1 January 2015. Refer to paragraph 139G
added by IFRS 9(2010) for full effective date information.] The operating cycle of an entity is the time
between the acquisition of assets for processing and their realisation in cash or cash equivalents. When the
entity’s normal operating cycle is not clearly identifiable, it is assumed to be twelve months. Current assets
also include assets held primarily for the purpose of trading (examples include some financial assets that
meet the definition of held for trading in IFRS 9) and the current portion of non-current financial assets.
Current liabilities
69 [Effective prior to 1 January 2010.] An entity shall classify a liability as current when:

a. it expects to settle the liability in its normal operating cycle;

b. it holds the liability primarily for the purpose of trading;

c. the liability is due to be settled within twelve months after the reporting period; or

d. the entity does not have an unconditional right to defer settlement of the liability for at
least twelve months after the reporting period.

An entity shall classify all other liabilities as non-current.

Deloitte Guidance and Links

Q&A IAS 1(2007): 69-1 — CLASSIFICATION OF REFUNDABLE DEPOSITS

Q&A IAS 1(2007): 69-2 — CURRENT/NON-CURRENT PRESENTATION OF NON-DERIVATIVE

FINANCIAL LIABILITIES

Q&A IAS 1(2007): 69-3 — CURRENT/NON-CURRENT CLASSIFICATION OF A CALLABLE TERM

LOAN

69 [Effective for annual reporting period beginning on or after 1 January 2010. Refer to paragraph
139D for full effective information.] An entity shall classify a liability as current when:

a. it expects to settle the liability in its normal operating cycle;

b. it holds the liability primarily for the purpose of trading;

c. the liability is due to be settled within twelve months after the reporting period; or

d. it does not have an unconditional right to defer settlement of the liability for at least twelve
months after the reporting period (see paragraph 73). Terms of a liability that could, at the
option of the counterparty, result in its settlement by the issue of equity instruments do
not affect its classification.

An entity shall classify all other liabilities as non-current.

70 Some current liabilities, such as trade payables and some accruals for employee and other operating
costs, are part of the working capital used in the entity’s normal operating cycle. An entity classifies such
operating items as current liabilities even if they are due to be settled more than twelve months after the
reporting period. The same normal operating cycle applies to the classification of an entity’s assets and
liabilities. When the entity’s normal operating cycle is not clearly identifiable, it is assumed to be twelve
months.
71 [Effective prior to 1 January 2009.] Other current liabilities are not settled as part of the normal operating
cycle, but are due for settlement within twelve months after the reporting period or held primarily for the

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purpose of trading. Examples are financial liabilities classified as held for trading in accordance with IAS 39,
bank overdrafts, and the current portion of non-current financial liabilities, dividends payable, income taxes
and other non-trade payables. Financial liabilities that provide financing on a long-term basis (i.e., are not part
of the working capital used in the entity's normal operating cycle) and are not due for settlement within twelve
months after the reporting period are non-current liabilities, subject to paragraphs 74 and 75.

Deloitte Guidance and Links

Q&A IAS 1(2007): 71-1 — PRESENTATION OF NON-CLOSELY RELATED EMBEDDED

DERIVATIVES IN THE STATEMENT OF FINANCIAL POSITION

Q&A IAS 1(2007): 71-EX-1 — PRESENTATION OF NON-CLOSELY RELATED EMBEDDED

DERIVATIVES IN THE STATEMENT OF FINANCIAL POSITION — EXAMPLE

Q&A IAS 1(2007): 71-2 — CLASSIFICATION OF NON-CLOSELY RELATED EMBEDDED

DERIVATIVES AS CURRENT OR NON-CURRENT

71 [Effective for annual reporting periods beginning on or after 1 January 2009. Refer to paragraph 139C for
full effective information.] Other current liabilities are not settled as part of the normal operating cycle, but are
due for settlement within twelve months after the reporting period or held primarily for the purpose of trading.
Examples are some financial liabilities classified as held for trading in accordance with IAS 39, bank
overdrafts, and the current portion of non-current financial liabilities, dividends payable, income taxes and
other non-trade payables. Financial liabilities that provide financing on a long-term basis (ie are not part of the
working capital used in the entity’s normal operating cycle) and are not due for settlement within twelve
months after the reporting period are non-current liabilities, subject to paragraphs 74 and 75.

71 [Effective for annual reporting periods beginning on or after 1 January 2015. Refer to paragraph 139G
added by IFRS 9(2010) for full effective date information.] Other current liabilities are not settled as part of the
normal operating cycle, but are due for settlement within twelve months after the reporting period or held
primarily for the purpose of trading. Examples are some financial liabilities that meet the definition of held for
trading in IFRS 9, bank overdrafts, and the current portion of non-current financial liabilities, dividends
payable, income taxes and other non-trade payables. Financial liabilities that provide financing on a long-term
basis (ie are not part of the working capital used in the entity’s normal operating cycle) and are not due for
settlement within twelve months after the reporting period are non-current liabilities, subject to paragraphs 74
and 75.

72 An entity classifies its financial liabilities as current when they are due to be settled within twelve months
after the reporting period, even if:

a. the original term was for a period longer than twelve months, and

b. an agreement to refinance, or to reschedule payments, on a long-term basis is completed after

the reporting period and before the financial statements are authorised for issue.

Deloitte Guidance and Links

Q&A IAS 1(2007): 72-1 — REFINANCING OF A LIABILITY AFTER THE REPORTING PERIOD

73 If an entity expects, and has the discretion, to refinance or roll over an obligation for at least twelve
months after the reporting period under an existing loan facility, it classifies the obligation as non-current,
even if it would otherwise be due within a shorter period. However, when refinancing or rolling over the
obligation is not at the discretion of the entity (for example, there is no arrangement for refinancing), the entity
does not consider the potential to refinance the obligation and classifies the obligation as current.

Deloitte Guidance and Links

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Q&A IAS 1(2007): 73-1 — CLASSIFICATION OF A SHORT-TERM LOAN WITH A ROLLOVER OPTION
SUBJECT TO MEETING DEFINED CONDITIONS

74 When an entity breaches a provision of a long-term loan arrangement on or before the end of the
reporting period with the effect that the liability becomes payable on demand, it classifies the liability as
current, even if the lender agreed, after the reporting period and before the authorisation of the financial
statements for issue, not to demand payment as a consequence of the breach. An entity classifies the liability
as current because, at the end of the reporting period, it does not have an unconditional right to defer its
settlement for at least twelve months after that date.
75 However, an entity classifies the liability as non-current if the lender agreed by the end of the reporting
period to provide a period of grace ending at least twelve months after the reporting period, within which the
entity can rectify the breach and during which the lender cannot demand immediate repayment.
76 In respect of loans classified as current liabilities, if the following events occur between the end of the
reporting period and the date the financial statements are authorised for issue, those events are disclosed as
non-adjusting events in accordance with IAS 10 Events after the Reporting Period:

a. refinancing on a long-term basis;

b. rectification of a breach of a long-term loan arrangement; and

c. the granting by the lender of a period of grace to rectify a breach of a long-term loan arrangement
ending at least twelve months after the reporting period.

Information to be presented either in the statement of financial position or in the notes

77 An entity shall disclose, either in the statement of financial position or in the notes, further
subclassifications of the line items presented, classified in a manner appropriate to the entity’s
operations.
78 The detail provided in subclassifications depends on the requirements of IFRSs and on the size, nature
and function of the amounts involved. An entity also uses the factors set out in paragraph 58 to decide the
basis of subclassification. The disclosures vary for each item, for example:

a. items of property, plant and equipment are disaggregated into classes in accordance with IAS 16;

b. receivables are disaggregated into amounts receivable from trade customers, receivables from
related parties, prepayments and other amounts;

c. inventories are disaggregated, in accordance with IAS 2 Inventories, into classifications such as
merchandise, production supplies, materials, work in progress and finished goods;

d. provisions are disaggregated into provisions for employee benefits and other items; and

e. equity capital and reserves are disaggregated into various classes, such as paid-in capital, share
premium and reserves.

79 An entity shall disclose the following, either in the statement of financial position or the statement
of changes in equity, or in the notes:

a. for each class of share capital:

i. the number of shares authorised;

ii. the number of shares issued and fully paid, and issued but not fully paid;

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iii. par value per share, or that the shares have no par value;

iv. a reconciliation of the number of shares outstanding at the beginning and at the
end of the period;

v. the rights, preferences and restrictions attaching to that class including

restrictions on the distribution of dividends and the repayment of capital;

vi. shares in the entity held by the entity or by its subsidiaries or associates; and

vii. shares reserved for issue under options and contracts for the sale of shares,
including terms and amounts; and

Deloitte Guidance and Links

Q&A IAS 1(2007): 79(a)-1 — DISCLOSURE OF SHARES IN THE ENTITY HELD BY THE
ENTITY OR BY ITS SUBSIDIARIES OR ASSOCIATES

b. a description of the nature and purpose of each reserve within equity.

Deloitte Guidance and Links

Q&A IAS 1(2007): 79(b)-1 — DESCRIPTION OF NATURE AND PURPOSE OF EACH

RESERVE WITHIN EQUITY

Deloitte Guidance and Links

Q&A IAS 1(2007): 79-1 — PRESENTATION OF SHARE CAPITAL AND RESERVES WHEN 'LEGAL'
SHARE CAPITAL IS CLASSIFIED AS LIABILITIES

80 An entity without share capital, such as a partnership or trust, shall disclose information
equivalent to that required by paragraph 79(a), showing changes during the period in each category
of equity interest, and the rights, preferences and restrictions attaching to each category of equity
interest.
80A [Effective 1 January 2009. Refer to paragraph 139B for full effective information.] If an entity has
reclassified

a. a puttable financial instrument classified as an equity instrument, or

b. an instrument that imposes on the entity an obligation to deliver to another party a pro
rata share of the net assets of the entity only on liquidation and is classified as an equity
instrument

between financial liabilities and equity, it shall disclose the amount reclassified into and out of each
category (financial liabilities or equity), and the timing and reason for that reclassification.

Statement of comprehensive income 15

81 [Effective prior to 1 July 2012.] An entity shall present all items of income and expense
recognised in a period:

a. in a single statement of comprehensive income, or

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b. 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 (statement of comprehensive income).

Deloitte Guidance and Links

Q&A IAS 1(2007): 81-1 — ENTITY HAS NO ITEMS OF OTHER COMPREHENSIVE INCOME

81 [Effective for annual reporting periods beginning on or after 1 July 2012. Refer to paragraph 139J
for full effective date information.] [Deleted]

81A [Effective for annual reporting periods beginning on or after 1 July 2012. Refer to paragraph
139J for full effective date information.] The statement of profit or loss and other comprehensive
income (statement of comprehensive income) shall present, in addition to the profit or loss and other
comprehensive income sections:

a. profit or loss;

b. total other comprehensive income;

c. comprehensive income for the period, being the total of profit or loss and other
comprehensive income.

If an entity presents a separate statement of profit or loss it does not present the profit or loss
section in the statement presenting comprehensive income.

81B [Effective for annual reporting periods beginning on or after 1 July 2012. Refer to paragraph
139J for full effective date information.] An entity shall present the following items, in addition to the
profit or loss and other comprehensive income sections, as allocation of profit or loss and other
comprehensive income for the period:

a. profit or loss for the period attributable to:

i. non-controlling interests, and

ii. owners of the parent.

b. comprehensive income for the period attributable to:

i. non-controlling interests, and

ii. owners of the parent.

If an entity presents profit or loss in a separate statement it shall present (a) in that statement.

Information to be presented in the statement of comprehensive income 16

82 [Effective prior to 1 July 2012.] As a minimum, the statement of comprehensive income shall
include line items that present the following amounts for the period:

a. revenue;

b. finance costs;

c. share of the profit or loss of associates and joint ventures accounted for using the equity

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method;

d. tax expense;

e. a single amount comprising the total of:

i. the post-tax profit or loss of discontinued operations and

ii. the post-tax gain or loss recognised on the measurement to fair value less
costs to sell or on the disposal of the assets or disposal group(s) constituting
the discontinued operation;

f. profit or loss;

g. each component of other comprehensive income classified by nature (excluding amounts

in (h));

h. share of the other comprehensive income of associates and joint ventures accounted for
using the equity method; and

i. total comprehensive income.

Deloitte Guidance and Links

Q&A IAS 1(2007): 82-1 — PRESENTATION ON AN AFTER-TAX BASIS OF THE ENTITY’S SHARE OF
PROFITS OR LOSSES OF ASSOCIATES AND JOINT VENTURES ACCOUNTED FOR USING THE
EQUITY METHOD

Q&A IAS 1(2007): 82-2 — IS THE ENTITY’S SHARE OF THE PROFITS OR LOSSES OF
ASSOCIATES AND JOINT VENTURES ACCOUNTED FOR USING THE EQUITY METHOD
REQUIRED TO BE PRESENTED ABOVE THE TAX LINE?

Q&A IAS 1(2007): 82-3 — PRESENTATION OF TAX-BASED STRUCTURING INCOME

Q&A IAS 1(2007): 82-4 — PRESENTATION OF INVESTMENT INCOME

Q&A IAS 1(2007): 82-5 — PRESENTATION OF ‘NET’ FINANCE COSTS

Q&A IAS 1(2007): 82-6 — PRESENTATION OF REVENUE IN THE STATEMENT OF

COMPREHENSIVE INCOME

Q&A IAS 1(2007): 82-7 — PRESENTATION OF PROFIT FROM OPERATIONS

Q&A IAS 1(2007): 82-8 — PRESENTATION OF THE INVESTOR’S SHARE OF THE PROFIT OR LOSS
OF AN ASSOCIATE OR A JOINT VENTURE WITHIN A SINGLE LINE ITEM IN PROFIT OR LOSS

Q&A IAS 1(2007): 82-9 — SEGREGATION OF AN INVESTOR’S SHARE OF THE PROFITS OR

LOSSES OF ASSOCIATES OR JOINT VENTURES OVER DIFFERENT LINE ITEMS IN PROFIT OR
LOSS

Q&A IAS 1(2007): 82-10 — PRESENTATION OF THE PROFITS OR LOSSES OF ASSOCIATES AND
JOINT VENTURES ACCOUNTED FOR USING THE EQUITY METHOD AS PART OF PROFIT FROM
OPERATIONS

82 [Effective for annual reporting periods beginning on or after 1 July 2012. Refer to paragraph 139J
for full effective date information.] In addition to items required by other IFRSs, the profit or loss
section or the statement of profit or loss shall include line items that present the following amounts
for the period:

a. revenue;

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b. finance costs;

c. share of the profit or loss of associates and joint ventures accounted for using the equity
method;

d. tax expense;

e. [deleted]

ea. a single amount for the total of discontinued operations (see IFRS 5).

f.–i. [deleted]
82 [Effective for annual reporting periods beginning on or after 1 January 2015. Refer to paragraph
139E added by IFRS 9(2009) for full effective date information.] In additional to the items required by
other IFRSs, the profit or loss section or statement of profit and loss shall include line items that
present the following amounts for the period:

a. revenue;

aa. gains and losses arising from the derecognition of financial assets measured at amortised cost;

b. finance costs;

c. share of the profit or loss of associates and joint ventures accounted for using the equity
method;

ca. if a financial asset is reclassified so that it is measured at fair value, any gain or loss arising
from a difference between the previous carrying amount and its fair value at the reclassification
date (as defined in IFRS 9);

d. tax expense;

e. [deleted]

ea. a single amount for the total of discontinued operations (see IFRS 5).

f.–i. [deleted];
82 [Effective for annual reporting periods beginning on or after 1 January 2015. Refer to paragraph
139G added by IFRS 9(2010) for full effective date information.] In additional to the items required by
other IFRSs, the profit or loss section or statement of profit and loss shall include line items that
present the following amounts for the period:

a. revenue;

aa. gains and losses arising from the derecognition of financial assets measured at amortised cost;

b. finance costs;

c. share of the profit or loss of associates and joint ventures accounted for using the equity
method;

ca. if a financial asset is reclassified so that it is measured at fair value, any gain or loss arising
from a difference between the previous carrying amount and its fair value at the reclassification
date (as defined in IFRS 9);

d. tax expense;

e. [deleted]

ea. a single amount for the total of discontinued operations (see IFRS 5).

f.–i. [deleted];

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Information to be presented in the other comprehensive income section

82A [Effective for annual reporting periods beginning on or after 1 July 2012. Refer to paragraph
139J for full effective date information.] The other comprehensive income section shall present line
items for amounts of other comprehensive income in the period, classified by nature (including share
of the other comprehensive income of associates and joint ventures accounted for using the equity
method) and grouped into those that, in accordance with other IFRSs:

a. will not be reclassified subsequently to profit or loss; and

b. will be reclassified subsequently to profit or loss when specific conditions are met.

83 [Effective prior to 1 July 2009.] An entity shall disclose the following items in the statement of
comprehensive income as allocations for the period:

a. profit or loss for the period attributable to:

i. minority interest, and

ii. owners of the parent.

b. total comprehensive income for the period attributable to:

i. minority interest, and

ii. owners of the parent.

83 [Effective for annual reporting periods beginning on or after 1 July 2009. If an entity applies IAS
27 (revised 2008) for an earlier period, these amendments shall be applied for that earlier period.] An
entity shall disclose the following items in the statement of comprehensive income as allocations of
profit or loss for the period:

a. profit or loss for the period attributable to:

i. non-controlling interests, and

ii. owners of the parent.

b. total comprehensive income for the period attributable to:

i. non-controlling interest, and

ii. owners of the parent.

83 [Effective for annual reporting periods beginning on or after 1 January 2013. Refer to paragraph
139J for full effective date information.] [Deleted]
84 [Effective prior to 1 January 2013.] An entity may present in a separate income statement (see
paragraph 81) the line items in paragraph 82(a)–(f) and the disclosures in paragraph 83(a).
84 [Effective for annual reporting periods beginning on or after 1 January 2013. Refer to paragraph
139J for full effective date information.] [Deleted]
85 [Effective prior to 1 July 2012.] An entity shall present additional line items, headings and
subtotals in the statement of comprehensive income and the separate income statement (if
presented), when such presentation is relevant to an understanding of the entity’s financial
performance.
85 [Effective for annual reporting periods beginning on or after 1 July 2012. Refer to paragraph 139J
for full effective date information.] An entity shall present additional line items, headings and

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subtotals in the statement(s) presenting profit or loss and other comprehensive income, when such
presentation is relevant to an understanding of the entity’s financial performance.
86 [Effective prior to 1 July 2012.] Because the effects of an entity’s various activities, transactions and other
events differ in frequency, potential for gain or loss and predictability, disclosing the components of financial
performance assists users in understanding the financial performance achieved and in making projections of
future financial performance. An entity includes additional line items in the statement of comprehensive
income and in the separate income statement (if presented), and it amends the descriptions used and the
ordering of items when this is necessary to explain the elements of financial performance. An entity considers
factors including materiality and the nature and function of the items of income and expense. For example, a
financial institution may amend the descriptions to provide information that is relevant to the operations of a
financial institution. An entity does not offset income and expense items unless the criteria in paragraph 32
are met.
86 [Effective for annual reporting periods beginning on or after 1 July 2012. Refer to paragraph 139J for full
effective date information.] Because the effects of an entity’s various activities, transactions and other events
differ in frequency, potential for gain or loss and predictability, disclosing the components of financial
performance assists users in understanding the financial performance achieved and in making projections of
future financial performance. An entity includes additional line items in the statement(s) presenting profit or
loss and other comprehensive income and it amends the descriptions used and the ordering of items when
this is necessary to explain the elements of financial performance. An entity considers factors including
materiality and the nature and function of the items of income and expense. For example, a financial
institution may amend the descriptions to provide information that is relevant to the operations of a financial
institution. An entity does not offset income and expense items unless the criteria in paragraph 32 are met.
87 [Effective prior to 1 July 2012.] An entity shall not present any items of income or expense as
extraordinary items, in the statement of comprehensive income or the separate income statement (if
presented), or in the notes.
87 [Effective for annual reporting periods beginning on or after 1 July 2012. Refer to paragraph 139J
for full effective date information.] An entity shall not present any items of income or expense as
extraordinary items, in the statement(s) presenting profit or loss and other comprehensive income, or
in the notes.
Profit or loss for the period

88 An entity shall recognise all items of income and expense in a period in profit or loss unless an
IFRS requires or permits otherwise.

89 Some IFRSs specify circumstances when an entity recognises particular items outside profit or loss in
the current period. IAS 8 specifies two such circumstances: the correction of errors and the effect of changes
in accounting policies. Other IFRSs require or permit components of other comprehensive income that meet
the Framework’s definition of income or expense to be excluded from profit or loss (see paragraph 7).
Other comprehensive income for the period
90 [Effective prior to 1 July 2012.] An entity shall disclose the amount of income tax relating to each
component of other comprehensive income, including reclassification adjustments, either in the
statement of comprehensive income or in the notes.

90 [Effective for annual reporting periods beginning on or after 1 July 2012. Refer to paragraph 139J
for full effective date information.] An entity shall disclose the amount of income tax relating to each
item of other comprehensive income, including reclassification adjustments, either in the statement
of profit or loss and other comprehensive income or in the notes.
91 [Effective prior to 1 July 2012.] An entity may present components of other comprehensive income either:

a. net of related tax effects, or

b. before related tax effects with one amount shown for the aggregate amount of income tax relating
to those components.

91 [Effective for annual reporting periods beginning on or after 1 July 2012. Refer to paragraph 139J for full

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effective date information.] An entity may present items of other comprehensive income either:

a. net of related tax effects, or

b. before related tax effects with one amount shown for the aggregate amount of income tax relating
to those items.

If an entity elects alternative (b), it shall allocate the tax between the items that might be reclassified
subsequently to the profit or loss section and those that will not be reclassified subsequently to the profit or
loss section.

92 An entity shall disclose reclassification adjustments relating to components of other

comprehensive income.
93 [Effective prior to 1 January 2015.] Other IFRSs specify whether and when amounts previously
recognised in other comprehensive income are reclassified to profit or loss. Such reclassifications are
referred to in this Standard as reclassification adjustments. A reclassification adjustment is included with the
related component of other comprehensive income in the period that the adjustment is reclassified to profit or
loss. For example, gains realised on the disposal of available-for-sale financial assets are included in profit or
loss of the current period. These amounts may have been recognised in other comprehensive income as
unrealised gains in the current or previous periods. Those unrealised gains must be deducted from other
comprehensive income in the period in which the realised gains are reclassified to profit or loss to avoid
including them in total comprehensive income twice.
93 [Effective for annual reporting periods beginning on or after 1 January 2015. Refer to paragraph 139E
added by IFRS 9(2009) for full effective date information.] Other IFRSs specify whether and when amounts
previously recognised in other comprehensive income are reclassified to profit or loss. Such reclassifications
are referred to in this Standard as reclassification adjustments. A reclassification adjustment is included with
the related component of other comprehensive income in the period that the adjustment is reclassified to
profit or loss. These amounts may have been recognised in other comprehensive income as unrealised gains
in the current or previous periods. Those unrealised gains must be deducted from other comprehensive
income in the period in which the realised gains are reclassified to profit or loss to avoid including them in
total comprehensive income twice.
93 [Effective for annual reporting periods beginning on or after 1 January 2015. Refer to paragraph 139G
added by IFRS 9(2010) for full effective date information.] Other IFRSs specify whether and when amounts
previously recognised in other comprehensive income are reclassified to profit or loss. Such reclassifications
are referred to in this Standard as reclassification adjustments. A reclassification adjustment is included with
the related component of other comprehensive income in the period that the adjustment is reclassified to
profit or loss. These amounts may have been recognised in other comprehensive income as unrealised gains
in the current or previous periods. Those unrealised gains must be deducted from other comprehensive
income in the period in which the realised gains are reclassified to profit or loss to avoid including them in
total comprehensive income twice.
94 [Effective prior to 1 July 2012.] An entity may present reclassification adjustments in the statement of
comprehensive income or in the notes. An entity presenting reclassification adjustments in the notes presents
the components of other comprehensive income after any related reclassification adjustments.
94 [Effective for annual reporting periods beginning on or after 1 July 2012. Refer to paragraph 139J for full
effective date information.] An entity may present reclassification adjustments in the statement(s) of profit or
loss and other comprehensive income or in the notes. An entity presenting reclassification adjustments in the
notes presents the items of other comprehensive income after any related reclassification adjustments.
95 [Effective prior to 1 January 2015.] Reclassification adjustments arise, for example, on disposal of a
foreign operation (see IAS 21), on derecognition of available-for-sale financial assets (see IAS 39) and when
a hedged forecast transaction affects profit or loss (see paragraph 100 of IAS 39 in relation to cash flow
hedges).
95 [Effective for annual reporting periods beginning on or after 1 January 2015. Refer to paragraph 139E
added by IFRS 9(2009) for full effective date information.] Reclassification adjustments arise, for example, on
disposal of a foreign operation (see IAS 21) and when a hedged forecast transaction affects profit or loss
(see paragraph 100 of IAS 39 in relation to cash flow hedges).

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95 [Effective for annual reporting periods beginning on or after 1 January 2015. Refer to paragraph 139G
added by IFRS 9(2010) for full effective date information.] Reclassification adjustments arise, for example, on
disposal of a foreign operation (see IAS 21) and when a hedged forecast cash flow affects profit or loss (see
paragraph 100 of IAS 39).
96 [Effective prior to 1 January 2013.] Reclassification adjustments do not arise on changes in revaluation
surplus recognised in accordance with IAS 16 or IAS 38 or on actuarial gains and losses on defined benefit
plans recognised in accordance with paragraph 93A of IAS 19. These components are recognised in other
comprehensive income and are not reclassified to profit or loss in subsequent periods. Changes in
revaluation surplus may be transferred to retained earnings in subsequent periods as the asset is used or
when it is derecognised (see IAS 16 and IAS 38). Actuarial gains and losses are reported in retained
earnings in the period that they are recognised as other comprehensive income (see IAS 19).
96 [Effective for annual reporting periods beginning on or after 1 January 2013. Refer to paragraph 139K for
full effective date information.] Reclassification adjustments do not arise on changes in revaluation surplus
recognised in accordance with IAS 16 or IAS 38 or on remeasurements of defined benefit plans recognised in
accordance with IAS 19. These components are recognised in other comprehensive income and are not
reclassified to profit or loss in subsequent periods. Changes in revaluation surplus may be transferred to
retained earnings in subsequent periods as the asset is used or when it is derecognised (see IAS 16 and IAS
38).

Information to be presented in the statement of comprehensive income or in the notes 17

97 When items of income or expense are material, an entity shall disclose their nature and amount
separately.

Deloitte Guidance and Links

Q&A IAS 1(2007): 97-1 — COLUMNAR PRESENTATION IN THE STATEMENT OF COMPREHENSIVE

INCOME

98 Circumstances that would give rise to the separate disclosure of items of income and expense include:

a. write-downs of inventories to net realisable value or of property, plant and equipment to

recoverable amount, as well as reversals of such write-downs;

b. restructurings of the activities of an entity and reversals of any provisions for the costs of
restructuring;

c. disposals of items of property, plant and equipment;

d. disposals of investments;

e. discontinued operations;

f. litigation settlements; and

g. other reversals of provisions.

99 An entity shall present an analysis of expenses recognised in profit or loss using a classification
based on either their nature or their function within the entity, whichever provides information that is
reliable and more relevant.

Deloitte Guidance and Links

Q&A IAS 1(2007): 99-1 — CLASSIFICATION OF SHIPPING COSTS INCURRED ON PRODUCTS

SOLD

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Q&A IAS 1(2007): 99-2 — CLASSIFICATION OF EXCHANGE GAINS AND LOSSES IN PROFIT OR
LOSS

100 [Effective prior to 1 July 2012.] Entities are encouraged to present the analysis in paragraph 99 in the
statement of comprehensive income or in the separate income statement (if presented).
100 [Effective for annual reporting periods beginning on or after 1 July 2012. Refer to paragraph 139J for full
effective date information.] Entities are encouraged to present the analysis in paragraph 99 in the statement(s)
presenting profit or loss and other comprehensive income.

101 Expenses are subclassified to highlight components of financial performance that may differ in terms of
frequency, potential for gain or loss and predictability. This analysis is provided in one of two forms.
102 The first form of analysis is the ‘nature of expense’ method. An entity aggregates expenses within profit
or loss according to their nature (for example, depreciation, purchases of materials, transport costs, employee
benefits and advertising costs), and does not reallocate them among functions within the entity. This method
may be simple to apply because no allocations of expenses to functional classifications are necessary. An
example of a classification using the nature of expense method is as follows:

Revenue X

Other income X

Changes in inventories of finished goods and work in progress X

Raw materials and consumables used X

Employee benefits expense X

Depreciation and amortisation expense X

Other expenses X

Total expenses (X)

Profit before tax X

103 The second form of analysis is the ‘function of expense’ or ‘cost of sales’ method and classifies
expenses according to their function as part of cost of sales or, for example, the costs of distribution or
administrative activities. At a minimum, an entity discloses its cost of sales under this method separately from
other expenses. This method can provide more relevant information to users than the classification of
expenses by nature, but allocating costs to functions may require arbitrary allocations and involve
considerable judgement. An example of a classification using the function of expense method is as follows:

Revenue X

Cost of sales (X)

Gross profit X

Other income X

Distribution costs (X)

Administrative expenses (X)

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Other expenses (X)

Profit before tax X

104 An entity classifying expenses by function shall disclose additional information on the nature of
expenses, including depreciation and amortisation expense and employee benefits expense.
105 The choice between the function of expense method and the nature of expense method depends on
historical and industry factors and the nature of the entity. Both methods provide an indication of those costs
that might vary, directly or indirectly, with the level of sales or production of the entity. Because each method
of presentation has merit for different types of entities, this Standard requires management to select the
presentation that is reliable and more relevant. However, because information on the nature of expenses is
useful in predicting future cash flows, additional disclosure is required when the function of expense
classification is used. In paragraph 104, ‘employee benefits’ has the same meaning as in IAS 19.

Statement of changes in equity

Information to be presented in the statement of changes in equity
106 [Effective prior to 1 July 2009.] An entity shall present a statement of changes in equity showing
in the statement:

a. total comprehensive income for the period, showing separately the total amounts
attributable to owners of the parent and to minority interest;

b. for each component of equity, the effects of retrospective application or retrospective

restatement recognised in accordance with IAS 8;

c. the amounts of transactions with owners in their capacity as owners, showing separately
contributions by and distributions to owners; and

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

Deloitte Guidance and Links

Q&A IAS 1(2007): 106(d)-1 — ACCOUNTING FOR CAPITAL CONTRIBUTIONS BY THE

RECIPIENT

Q&A IAS 1(2007): 106(d)-2 — ACCOUNTING FOR A WAIVER OF INTRA-GROUP DEBT

106 [Effective for annual reporting periods beginning on or after 1 July 2009. If an entity applies IAS
27 (revised 2008) for an earlier period, these amendments shall be applied for that earlier period.] An
entity shall present a statement of changes in equity showing in the statement:

a. total comprehensive income for the period, showing separately the total amounts
attributable to owners of the parent and to non-controlling interests;

b. for each component of equity, the effects of retrospective application or retrospective

restatement recognised in accordance with IAS 8; and

c. [deleted]

d. for each component of equity, a reconciliation between the carrying amount at the
beginning and the end of the period, separately disclosing changes resulting from:

i. profit or loss;

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ii. each item of other comprehensive income; and

iii. transactions with owners in their capacity as owners, showing separately

contributions by and distributions to owners and changes in ownership
interests in subsidiaries that do not result in a loss of control.

106 [Effective for annual reporting periods beginning on or after 1 January 2011. Refer to paragraph
139F for full effective date information.] An entity shall present a statement of changes in equity as
required by paragraph 10. The statement of changes in equity includes the following information:

a. total comprehensive income for the period, showing separately the total amounts
attributable to owners of the parent and to noncontrolling interests;

b. for each component of equity, the effects of retrospective application or retrospective

restatement recognised in accordance with IAS 8; and

c. [deleted]

d. for each component of equity, a reconciliation between the carrying amount at the
beginning and the end of the period, separately disclosing changes resulting from:

i. profit or loss;

ii. other comprehensive income; and

iii. transactions with owners in their capacity as owners, showing separately

contributions by and distributions to owners and changes in ownership
interests in subsidiaries that do not result in a loss of control.

Information to be presented in the statement of changes in equity or in the notes

106A [Effective for annual reporting periods beginning on or after 1 January 2011. Refer to
paragraph 139F for full effective date information.] For each component of equity an entity shall
present, either in the statement of changes in equity or in the notes, an analysis of other
comprehensive income by item (see paragraph 106(d)(ii)).
107 [Effective prior to 1 January 2011.] An entity shall present, either in the statement of changes in
equity or in the notes, the amount of dividends recognised as distributions to owners during the
period, and the related amount per share.

Deloitte Guidance and Links

Q&A IAS 1(2007): 107-1 — PRESENTATION OF ‘STOCK’ DIVIDENDS

107 [Effective for annual reporting periods beginning on or after 1 January 2011. Refer to paragraph
139F for full effective date information.] An entity shall present, either in the statement of changes in
equity or in the notes, the amounts of dividends recognised as distributions to owners during the
period, and the related amount of dividends per share.
108 In paragraph 106, the components of equity include, for example, each class of contributed equity, the
accumulated balance of each class of other comprehensive income and retained earnings.

109 Changes in an entity’s equity between the beginning and the end of the reporting period reflect the
increase or decrease in its net assets during the period. Except for changes resulting from transactions with
owners in their capacity as owners (such as equity contributions, reacquisitions of the entity’s own equity
instruments and dividends) and transaction costs directly related to such transactions, the overall change in
equity during a period represents the total amount of income and expense, including gains and losses,
generated by the entity’s activities during that period.

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110 IAS 8 requires retrospective adjustments to effect changes in accounting policies, to the extent
practicable, except when the transition provisions in another IFRS require otherwise. IAS 8 also requires
restatements to correct errors to be made retrospectively, to the extent practicable. Retrospective
adjustments and retrospective restatements are not changes in equity but they are adjustments to the
opening balance of retained earnings, except when an IFRS requires retrospective adjustment of another
component of equity. Paragraph 106(b) requires disclosure in the statement of changes in equity of the total
adjustment to each component of equity resulting from changes in accounting policies and, separately, from
corrections of errors. These adjustments are disclosed for each prior period and the beginning of the period.

Statement of cash flows

111 Cash flow information provides users of financial statements with a basis to assess the ability of the
entity to generate cash and cash equivalents and the needs of the entity to utilise those cash flows. IAS 7
sets out requirements for the presentation and disclosure of cash flow information.

Notes
Structure
112 The notes shall:

a. present information about the basis of preparation of the financial statements and the
specific accounting policies used in accordance with paragraphs 117–124;

b. disclose the information required by IFRSs that is not presented elsewhere in the financial
statements; and

Deloitte Guidance and Links

Q&A IAS 1(2007): 112(b)-1 — DISCLOSURES FOR JOINT OPERATIONS OR

PROPORTIONATELY CONSOLIDATED JOINTLY CONTROLLED ENTITIES

c. provide information that is not presented elsewhere in the financial statements, but is
relevant to an understanding of any of them.

113 An entity shall, as far as practicable, present notes in a systematic manner. An entity shall
cross-reference each item in the statements of financial position and of comprehensive income, in
the separate income statement (if presented), and in the statements of changes in equity and of cash
flows to any related information in the notes.
114 An entity normally presents notes in the following order, to assist users to understand the financial
statements and to compare them with financial statements of other entities:

a. statement of compliance with IFRSs (see paragraph 16);

b. summary of significant accounting policies applied (see paragraph 117);

c. supporting information for items presented in the statements of financial position and of
comprehensive income, in the separate income statement (if presented), and in the statements of
changes in equity and of cash flows, in the order in which each statement and each line item is
presented; and

d. other disclosures, including:

i. contingent liabilities (see IAS 37) and unrecognised contractual commitments, and

ii. non-financial disclosures, eg the entity’s financial risk management objectives and
policies (see IFRS 7).

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115 [Effective prior to 1 July 2012.] In some circumstances, it may be necessary or desirable to vary the
order of specific items within the notes. For example, an entity may combine information on changes in fair
value recognised in profit or loss with information on maturities of financial instruments, although the former
disclosures relate to the statement of comprehensive income or separate income statement (if presented)
and the latter relate to the statement of financial position. Nevertheless, an entity retains a systematic
structure for the notes as far as practicable.
115 [Effective for annual reporting periods beginning on or after 1 July 2012. Refer to paragraph 139J for full
effective date information.] In some circumstances, it may be necessary or desirable to vary the order of
specific items within the notes. For example, an entity may combine information on changes in fair value
recognised in profit or loss with information on maturities of financial instruments, although the former
disclosures relate to the statement(s) presenting profit or loss and other comprehensive income and the latter
relate to the statement of financial position. Nevertheless, an entity retains a systematic structure for the
notes as far as practicable.
116 An entity may present notes providing information about the basis of preparation of the financial
statements and specific accounting policies as a separate section of the financial statements.
Disclosure of accounting policies
117 An entity shall disclose in the summary of significant accounting policies:

a. the measurement basis (or bases) used in preparing the financial statements, and

b. the other accounting policies used that are relevant to an understanding of the financial
statements.

118 It is important for an entity to inform users of the measurement basis or bases used in the financial
statements (for example, historical cost, current cost, net realisable value, fair value or recoverable amount)
because the basis on which an entity prepares the financial statements significantly affects users’ analysis.
When an entity uses more than one measurement basis in the financial statements, for example when
particular classes of assets are revalued, it is sufficient to provide an indication of the categories of assets
and liabilities to which each measurement basis is applied.
119 [Effective prior to 1 January 2013.] In deciding whether a particular accounting policy should be
disclosed, management considers whether disclosure would assist users in understanding how transactions,
other events and conditions are reflected in reported financial performance and financial position. Disclosure
of particular accounting policies is especially useful to users when those policies are selected from
alternatives allowed in IFRSs. An example is disclosure of whether a venturer recognises its interest in a
jointly controlled entity using proportionate consolidation or the equity method (see IAS 31 Interests in Joint
Ventures). Some IFRSs specifically require disclosure of particular accounting policies, including choices
made by management between different policies they allow. For example, IAS 16 requires disclosure of the
measurement bases used for classes of property, plant and equipment.
119 [Effective for annual reporting periods beginning on or after 1 January 2013. Refer to paragraph 139H
for full effective date information.] In deciding whether a particular accounting policy should be disclosed,
management considers whether disclosure would assist users in understanding how transactions, other
events and conditions are reflected in reported financial performance and financial position. Disclosure of
particular accounting policies is especially useful to users when those policies are selected from alternatives
allowed in IFRSs. An example is disclosure of whether an entity applies the fair value or cost model to its
investment property (see IAS 40 Investment Property). Some IFRSs specifically require disclosure of
particular accounting policies, including choices made by management between different policies they allow.
For example, IAS 16 requires disclosure of the measurement bases used for classes of property, plant and
equipment.
120 Each entity considers the nature of its operations and the policies that the users of its financial
statements would expect to be disclosed for that type of entity. For example, users would expect an entity
subject to income taxes to disclose its accounting policies for income taxes, including those applicable to
deferred tax liabilities and assets. When an entity has significant foreign operations or transactions in foreign
currencies, users would expect disclosure of accounting policies for the recognition of foreign exchange gains
and losses.

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121 An accounting policy may be significant because of the nature of the entity’s operations even if amounts
for current and prior periods are not material. It is also appropriate to disclose each significant accounting
policy that is not specifically required by IFRSs but the entity selects and applies in accordance with IAS 8.
122 An entity shall disclose, in the summary of significant accounting policies or other notes, the
judgements, apart from those involving estimations (see paragraph 125), that management has made
in the process of applying the entity’s accounting policies and that have the most significant effect
on the amounts recognised in the financial statements.
123 [Effective prior to 1 January 2013.] In the process of applying the entity’s accounting policies,
management makes various judgements, apart from those involving estimations, that can significantly affect
the amounts it recognises in the financial statements. For example, management makes judgements in
determining:

a. whether financial assets are held-to-maturity investments;

b. when substantially all the significant risks and rewards of ownership of financial assets and lease
assets are transferred to other entities;

c. whether, in substance, particular sales of goods are financing arrangements and therefore do not
give rise to revenue; and

d. whether the substance of the relationship between the entity and a special purpose entity
indicates that the entity controls the special purpose entity.

123 [Effective for annual reporting periods beginning on or after 1 January 2013. Refer to paragraph 139H
for full effective date information.] In the process of applying the entity’s accounting policies, management
makes various judgements, apart from those involving estimations, that can significantly affect the amounts it
recognises in the financial statements. For example, management makes judgements in determining:

a. whether financial assets are held-to-maturity investments;

b. when substantially all the significant risks and rewards of ownership of financial assets and lease
assets are transferred to other entities; and

c. whether, in substance, particular sales of goods are financing arrangements and therefore do not
give rise to revenue.

d. [deleted]

123 [Effective for annual reporting periods beginning on or after 1 January 2015. Refer to paragraph 139G
added by IFRS 9(2010) for full effective date information.] In the process of applying the entity’s accounting
policies, management makes various judgements, apart from those involving estimations, that can
significantly affect the amounts it recognises in the financial statements. For example, management makes
judgements in determining:

a. [deleted]

b. when substantially all the significant risks and rewards of ownership of financial assets and lease
assets are transferred to other entities; and

c. whether, in substance, particular sales of goods are financing arrangements and therefore do not
give rise to revenue.

d. [deleted]

124 [Effective prior to 1 January 2013.] Some of the disclosures made in accordance with paragraph 122
are required by other IFRSs. For example, IAS 27 requires an entity to disclose the reasons why the entity’s

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ownership interest does not constitute control, in respect of an investee that is not a subsidiary even though
more than half of its voting or potential voting power is owned directly or indirectly through subsidiaries.IAS
40 Investment Property requires disclosure of the criteria developed by the entity to distinguish investment
property from owner-occupied property and from property held for sale in the ordinary course of business,
when classification of the property is difficult.
124 [Effective for annual reporting periods beginning on or after 1 January 2013. Refer to paragraph 139H
for full effective date information.] Some of the disclosures made in accordance with paragraph 122 are
required by other IFRSs. For example, IFRS 12 Disclosure of Interests in Other Entities requires an entity to
disclose the judgements it has made in determining whether it controls another entity. IAS 40 Investment
Property requires disclosure of the criteria developed by the entity to distinguish investment property from
owner-occupied property and from property held for sale in the ordinary course of business, when
classification of the property is difficult.
Sources of estimation uncertainty
125 An entity shall disclose information about the assumptions it makes about the future, and other
major sources of estimation uncertainty at the end of the reporting period, that have a significant risk
of resulting in a material adjustment to the carrying amounts of assets and liabilities within the next
financial year. In respect of those assets and liabilities, the notes shall include details of:

a. their nature, and

b. their carrying amount as at the end of the reporting period.

126 Determining the carrying amounts of some assets and liabilities requires estimation of the effects of
uncertain future events on those assets and liabilities at the end of the reporting period. For example, in the
absence of recently observed market prices, future-oriented estimates are necessary to measure the
recoverable amount of classes of property, plant and equipment, the effect of technological obsolescence on
inventories, provisions subject to the future outcome of litigation in progress, and long-term employee benefit
liabilities such as pension obligations. These estimates involve assumptions about such items as the risk
adjustment to cash flows or discount rates, future changes in salaries and future changes in prices affecting
other costs.
127 The assumptions and other sources of estimation uncertainty disclosed in accordance with paragraph
125 relate to the estimates that require management’s most difficult, subjective or complex judgements. As
the number of variables and assumptions affecting the possible future resolution of the uncertainties
increases, those judgements become more subjective and complex, and the potential for a consequential
material adjustment to the carrying amounts of assets and liabilities normally increases accordingly.
128 [Effective prior to 1 January 2013.] The disclosures in paragraph 125 are not required for assets and
liabilities with a significant risk that their carrying amounts might change materially within the next financial
year if, at the end of the reporting period, they are measured at fair value based on recently observed market
prices. Such fair values might change materially within the next financial year but these changes would not
arise from assumptions or other sources of estimation uncertainty at the end of the reporting period.
128 [Effective for annual reporting periods beginning on or after 1 January 2013. Refer to paragraph 139I for
full effective date information.] The disclosures in paragraph 125 are not required for assets and liabilities with
a significant risk that their carrying amounts might change materially within the next financial year if, at the
end of the reporting period, they are measured at fair value based on a quoted price in an active market for
an identical asset or liability. Such fair values might change materially within the next financial year but these
changes would not arise from assumptions or other sources of estimation uncertainty at the end of the
reporting period.
129 An entity presents the disclosures in paragraph 125 in a manner that helps users of financial statements
to understand the judgements that management makes about the future and about other sources of
estimation uncertainty. The nature and extent of the information provided vary according to the nature of the
assumption and other circumstances. Examples of the types of disclosures an entity makes are:

a. the nature of the assumption or other estimation uncertainty;

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b. the sensitivity of carrying amounts to the methods, assumptions and estimates underlying their
calculation, including the reasons for the sensitivity;

c. the expected resolution of an uncertainty and the range of reasonably possible outcomes within
the next financial year in respect of the carrying amounts of the assets and liabilities affected; and

d. an explanation of changes made to past assumptions concerning those assets and liabilities, if
the uncertainty remains unresolved.

130 This Standard does not require an entity to disclose budget information or forecasts in making the
disclosures in paragraph 125.
131 Sometimes it is impracticable to disclose the extent of the possible effects of an assumption or another
source of estimation uncertainty at the end of the reporting period. In such cases, the entity discloses that it is
reasonably possible, on the basis of existing knowledge, that outcomes within the next financial year that are
different from the assumption could require a material adjustment to the carrying amount of the asset or
liability affected. In all cases, the entity discloses the nature and carrying amount of the specific asset or
liability (or class of assets or liabilities) affected by the assumption.
132 The disclosures in paragraph 122 of particular judgements that management made in the process of
applying the entity’s accounting policies do not relate to the disclosures of sources of estimation uncertainty
in paragraph 125.

133 [Effective prior to 1 January 2013.] Other IFRSs require the disclosure of some of the assumptions that
would otherwise be required in accordance with paragraph 125. For example, IAS 37 requires disclosure, in
specified circumstances, of major assumptions concerning future events affecting classes of provisions. IFRS
7 requires disclosure of significant assumptions the entity uses in estimating the fair values of financial assets
and financial liabilities that are carried at fair value. IAS 16 requires disclosure of significant assumptions that
the entity uses in estimating the fair values of revalued items of property, plant and equipment.
133 [Effective for annual reporting periods beginning on or after 1 January 2013. Refer to paragraph 139I for
full effective date information.] Other IFRSs require the disclosure of some of the assumptions that would
otherwise be required in accordance with paragraph 125. For example, IAS 37 requires disclosure, in
specified circumstances, of major assumptions concerning future events affecting classes of provisions. IFRS
13 Fair Value Measurement requires disclosure of significant assumptions (including the valuation technique
(s) and inputs) the entity uses when measuring the fair values of assets and liabilities that are carried at fair
value.
Capital
134 An entity shall disclose information that enables users of its financial statements to evaluate the
entity’s objectives, policies and processes for managing capital.

135 To comply with paragraph 134, the entity discloses the following:

a. qualitative information about its objectives, policies and processes for managing capital,
including:

i. a description of what it manages as capital;

ii. when an entity is subject to externally imposed capital requirements, the nature of
those requirements and how those requirements are incorporated into the
management of capital; and

iii. how it is meeting its objectives for managing capital.

b. summary quantitative data about what it manages as capital. Some entities regard some financial
liabilities (eg some forms of subordinated debt) as part of capital. Other entities regard capital as
excluding some components of equity (eg components arising from cash flow hedges).

c. any changes in (a) and (b) from the previous period.

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d. whether during the period it complied with any externally imposed capital requirements to which it
is subject.

e. when the entity has not complied with such externally imposed capital requirements, the
consequences of such non-compliance.

The entity bases these disclosures on the information provided internally to key management personnel.

Deloitte Guidance and Links

Q&A IAS 1(2007): 135-1 — DISCLOSURE REQUIREMENTS REGARDING EXTERNALLY IMPOSED

CAPITAL REQUIREMENTS — APPLICATION TO LOAN COVENANTS

136 An entity may manage capital in a number of ways and be subject to a number of different capital
requirements. For example, a conglomerate may include entities that undertake insurance activities and
banking activities and those entities may operate in several jurisdictions. When an aggregate disclosure of
capital requirements and how capital is managed would not provide useful information or distorts a financial
statement user’s understanding of an entity’s capital resources, the entity shall disclose separate information
for each capital requirement to which the entity is subject.
Puttable financial instruments classified as equity
136A [Effective for annual reporting periods beginning on or after 1 January 2009. Refer to
paragraph 139B for full effective information.] For puttable financial instruments classified as equity
instruments, an entity shall disclose (to the extent not disclosed elsewhere):

a. summary quantitative data about the amount classified as equity;

b. its objectives, policies and processes for managing its obligation to repurchase or redeem
the instruments when required to do so by the instrument holders, including any changes
from the previous period;

c. the expected cash outflow on redemption or repurchase of that class of financial

instruments; and

d. information about how the expected cash outflow on redemption or repurchase was
determined.

Other disclosures
137 An entity shall disclose in the notes:

a. the amount of dividends proposed or declared before the financial statements were
authorised for issue but not recognised as a distribution to owners during the period, and
the related amount per share; and

b. the amount of any cumulative preference dividends not recognised.

138 [Effective prior to 1 January 2009.] An entity shall disclose the following, if not disclosed
elsewhere in information published with the financial statements:

a. the domicile and legal form of the entity, its country of incorporation and the address of its
registered office (or principal place of business, if different from the registered office);

b. a description of the nature of the entity's operations and its principal activities; and

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c. the name of the parent and the ultimate parent of the group.

138 [Effective for annual reporting periods beginning on or after 1 January 2009. Refer to paragraph
139B for full effective information.] An entity shall disclose the following, if not disclosed elsewhere
in information published with the financial statements:

a. the domicile and legal form of the entity, its country of incorporation and the address of its
registered office (or principal place of business, if different from the registered office);

b. a description of the nature of the entity’s operations and its principal activities;

c. the name of the parent and the ultimate parent of the group; and

d. if it is a limited life entity, information regarding the length of its life.

Transition and effective date

139 An entity shall apply this Standard for annual reporting periods beginning on or after 1 January 2009.
Earlier application is permitted. If an entity adopts this Standard for an earlier period, it shall disclose that fact.
139A IAS 27 (as amended in 2008) amended paragraph 106. An entity shall apply that amendment for
annual reporting periods beginning on or after 1 July 2009. If an entity applies IAS 27 (amended 2008) for an
earlier period, the amendment shall be applied for that earlier period. The amendment shall be applied
retrospectively.
139B Puttable Financial Instruments and Obligations Arising on Liquidation (Amendments to IAS 32 and IAS
1), issued in February 2008, amended paragraph 138 and inserted paragraphs 8A, 80A and 136A. An entity
shall apply those amendments for annual reporting periods beginning on or after 1 January 2009. Earlier
application is permitted. If an entity applies the amendments for an earlier period, it shall disclose that fact
and apply the related amendments to IAS 32, IAS 39, IFRS 7 and IFRIC 2 Members’ Shares in Co-operative
Entities and Similar Instruments at the same time.

139C Paragraphs 68 and 71 were amended by Improvements to IFRSs issued in May 2008. An entity shall
apply those amendments for annual reporting periods beginning on or after 1 January 2009. Earlier
application is permitted. If an entity applies the amendments for an earlier period it shall disclose that fact.

139D Paragraph 69 was amended by Improvements to IFRSs issued in April 2009. An entity shall apply that
amendment for annual reporting periods beginning on or after 1 January 2010. Earlier application is
permitted. If an entity applies the amendment for an earlier period it shall disclose that fact.
139E IFRS 9, issued in November 2009, amended the definition of ‘other comprehensive income’ in
paragraph 7 and paragraphs 68, 82, 93 and 95. An entity shall apply those amendments when it applies IFRS
9.
139E [Effective for annual reporting periods beginning on or after 1 January 2015. Refer to paragraph 139G
added by IFRS 9(2010) for full effective date information.] [Deleted]
139F Paragraphs 106 and 107 were amended and paragraph 106A was added by Improvements to IFRSs
issued in May 2010. An entity shall apply those amendments for annual reporting periods beginning on or
after 1 January 2011. Earlier application is permitted.
139G IFRS 9, issued in October 2010, amended paragraphs 7, 68, 71, 82, 93, 95 and 123 and deleted
paragraph 139E. An entity shall apply those amendments when it applies IFRS 9 as issued in October 2010.
139H IFRS 10 and IFRS 12, issued in May 2011, amended paragraphs 4, 119, 123 and 124. An entity shall
apply those amendments when it applies IFRS 10 and IFRS 12.
139I IFRS 13, issued in May 2011, amended paragraphs 128 and 133. An entity shall apply those
amendments when it applies IFRS 13.
139J Presentation of Items of Other Comprehensive Income (Amendments to IAS 1), issued in June 2011,
amended paragraphs 7, 10, 82, 85–87, 90, 91, 94, 100 and 115, added paragraphs 10A, 81A, 81B and 82A,

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and deleted paragraphs 12, 81, 83 and 84. An entity shall apply those amendments for annual reporting
periods beginning on or after 1 July 2012. Earlier application is permitted. If an entity applies the amendments
for an earlier period it shall disclose that fact.
139K IAS 19 Employee Benefits (as amended in June 2011) amended the definition of ‘other
comprehensive income’ in paragraph 7 and paragraph 96. An entity shall apply those amendments when it
applies IAS 19 (as amended in June 2011).
139L Annual Improvements 2009–2011 Cycle, issued in May 2012, amended paragraphs 10, 38 and 41,
deleted paragraphs 39–40 and added paragraphs 38A–38D and 40A–40D. An entity shall apply that
amendment retrospectively in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates
and Errors for annual periods beginning on or after 1 January 2013. Earlier application is permitted. If an
entity applies that amendment for an earlier period it shall disclose that fact.

Withdrawal of IAS 1 (revised 2003)

140 This Standard supersedes IAS 1 Presentation of Financial Statements revised in 2003, as amended in
2005.

Appendix Amendments to other pronouncements

The amendments in this appendix shall be applied for annual reporting periods beginning on or after 1
January 2009. If an entity applies this Standard for an earlier period, these amendments shall be applied for
that earlier period. In the amended paragraphs, new text is underlined and deleted text is struck through.

*****

The amendments contained in this appendix when this Standard was revised in 2007 have been
incorporated into the relevant pronouncements published in this volume.

Approval by the Board of IAS 1 issued in September 2007

International Accounting Standard 1 Presentation of Financial Statements (as revised in 2007) was approved
for issue by ten of the fourteen members of the International Accounting Standards Board. Professor Barth
and Messrs Cope, Garnett and Leisenring dissented. Their dissenting opinions are set out after the Basis for
Conclusions.

Name Role
Sir David Tweedie Chairman
Thomas E Jones Vice-Chairman
Mary E Barth
Hans-Georg Bruns
Anthony T Cope
Philippe Danjou
Jan Engström
Robert P Garnett
Gilbert Gélard
James J Leisenring
Warren J McGregor
Patricia L O’Malley
John T Smith
Tatsumi Yamada

Approval by the Board of Puttable Financial Instruments and Obligations

Arising on Liquidation (Amendments to IAS 32 and IAS 1) issued in February
2008

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Puttable Financial Instruments and Obligations Arising on Liquidation (Amendments to IAS 32 Financial
Instruments: Presentation and IAS 1 Presentation of Financial Statements) was approved for issue by eleven
of the thirteen members of the International Accounting Standards Board. Professor Barth and Mr Garnett
dissented. Their dissenting opinions are set out after the Basis for Conclusions on IAS 32.

Name Role
Sir David Tweedie Chairman
Thomas E Jones Vice-Chairman
Mary E Barth
Stephen Cooper
Philippe Danjou
Jan Engström
Robert P Garnett
Gilbert Gélard
James J Leisenring
Warren J McGregor
John T Smith
Tatsumi Yamada
Wei-Guo Zhang

Basis for Conclusions on IAS 1 Presentation of Financial Statements

This Basis for Conclusions accompanies, but is not part of, IAS 1.

The International Accounting Standards Board revised IAS 1 Presentation of Financial Statements in 2007 as
part of its project on financial statement presentation. It was not the Board’s intention to reconsider as part of
that project all the requirements in IAS 1.

For convenience, the Board has incorporated into this Basis for Conclusions relevant material from the Basis
for Conclusions on the revision of IAS 1 in 2003 and its amendment in 2005. Paragraphs have been
renumbered and reorganised as necessary to reflect the new structure of the Standard.

References to the Framework are to IASC’s Framework for the Preparation and Presentation of Financial
Statements, adopted by the IASB in 2001. In September 2010 the IASB replaced the Framework with the
Conceptual Framework for Financial Reporting.

Introduction
BC1 The International Accounting Standards Committee (IASC) issued the first version of IAS 1 Disclosure
of Accounting Policies in 1975. It was reformatted in 1994 and superseded in 1997 by IAS 1 Presentation of
Financial Statements.18 In 2003 the International Accounting Standards Board revised IAS 1 as part of the
Improvements project and in 2005 the Board amended it as a consequence of issuing IFRS 7 Financial
Instruments: Disclosures. In 2007 the Board revised IAS 1 again as part of its project on financial statement
presentation. This Basis for Conclusions summarises the Board’s considerations in reaching its conclusions
on revising IAS 1 in 2003, on amending it in 2005 and revising it in 2007. It includes reasons for accepting
some approaches and rejecting others. Individual Board members gave greater weight to some factors than
to others.

The Improvements project—revision of IAS 1 (2003)

BC2 In July 2001 the Board announced that, as part of its initial agenda of technical projects, it would
undertake a project to improve a number of standards, including IAS 1. The project was undertaken in the
light of queries and criticisms raised in relation to the standards by securities regulators, professional
accountants and other interested parties. The objectives of the Improvements project were to reduce or
eliminate alternatives, redundancies and conflicts within standards, to deal with some convergence issues
and to make other improvements. The Board’s intention was not to reconsider the fundamental approach to
the presentation of financial statements established by IAS 1 in 1997.

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BC3 In May 2002 the Board published an exposure draft of proposed Improvements to International
Accounting Standards, which contained proposals to revise IAS 1. The Board received more than 160
comment letters. After considering the responses the Board issued in 2003 a revised version of IAS 1. In its
revision the Board’s main objectives were:

a. to provide a framework within which an entity assesses how to present fairly the effects of
transactions and other events, and assesses whether the result of complying with a requirement
in an IFRS would be so misleading that it would not give a fair presentation;

b. to base the criteria for classifying liabilities as current or non-current solely on the conditions
existing at the balance sheet date;

c. to prohibit the presentation of items of income and expense as ‘extraordinary items’;

d. to specify disclosures about the judgements that management has made in the process of
applying the entity’s accounting policies, apart from those involving estimations, and that have
the most significant effect on the amounts recognised in the financial statements; and

e. to specify disclosures about sources of estimation uncertainty at the balance sheet date that have
a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities
within the next financial year.

BC4 The following sections summarise the Board’s considerations in reaching its conclusions as part of its
Improvements project in 2003:

a. departures from IFRSs (paragraphs BC23–BC30)

b. criterion for exemption from requirements (paragraphs BC34–BC36)

c. effect of events after the reporting period on the classification of liabilities (paragraphs BC39–
BC48)

d. results of operating activities (paragraphs BC55 and BC56)

e. minority interest (paragraph BC59)19

f. extraordinary items (paragraphs BC60–BC64)

g. disclosure of the judgements management has made in the process of applying the entity’s
accounting policies (paragraphs BC77 and BC78)

h. disclosure of major sources of estimation uncertainty (paragraphs BC79–BC84).

Amendment to IAS 1—Capital Disclosures (2005)

BC5 In August 2005 the Board issued an Amendment to IAS 1—Capital Disclosures. The amendment
added to IAS 1 requirements for disclosure of:

a. the entity’s objectives, policies and processes for managing capital.

b. quantitative data about what the entity regards as capital.

c. whether the entity has complied with any capital requirements; and if it has not complied, the
consequences of such non-compliance.

BC6 The following sections summarise the Board’s considerations in reaching its conclusions as part of its
amendment to IAS 1 in 2005:

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a. disclosures about capital (paragraphs BC85–BC89)

b. objectives, policies and processes for managing capital (paragraphs BC90 and BC91)

c. externally imposed capital requirements (paragraphs BC92–BC97)

d. internal capital targets (paragraphs BC98–BC100).

Amendments to IAS 32 and IAS 1—Puttable Financial Instruments and Obligations Arising
on Liquidation (2008)
BC6A [Effective 1 January 2009. Refer to paragraph 139B for full effective information.] In July 2006 the
Board published an exposure draft of proposed amendments to IAS 32 and IAS 1 relating to the classification
of puttable instruments and instruments with obligations arising only on liquidation. The Board subsequently
confirmed the proposals and in February 2008 issued an amendment that now forms part of IAS 1.

Presentation of Items of Other Comprehensive Income (Amendments to IAS 1)

BC6B In May 2010 the Board published an exposure draft of proposed amendments to IAS 1 relating to the
presentation of items of other comprehensive income (OCI). The Board subsequently modified and confirmed
the proposals and in June 2011 issued Presentation of Items of Other Comprehensive Income (Amendments
to IAS 1). The amendments were developed in a joint project with the US national standard-setter, the
Financial Accounting Standards Board (FASB), with the aim of aligning the presentation of OCI so that
information in financial statements prepared by entities using IFRSs and entities using US generally accepted
accounting principles (GAAP) can be more easily compared.

Financial statement presentation—Joint project

BC7 In September 2001 the Board added to its agenda the performance reporting project (in March 2006
renamed the ‘financial statement presentation project’). The objective of the project was to enhance the
usefulness of information presented in the income statement. The Board developed a possible new model for
reporting income and expenses and conducted preliminary testing. Similarly, in the United States, the
Financial Accounting Standards Board (FASB) added a project on performance reporting to its agenda in
October 2001, developed its model and conducted preliminary testing. Constituents raised concerns about
both models and about the fact that they were different.
BC8 In April 2004 the Board and the FASB decided to work on financial statement presentation as a joint
project. They agreed that the project should address presentation and display not only in the income
statement, but also in the other statements that, together with the income statement, would constitute a
complete set of financial statements—the balance sheet, the statement of changes in equity, and the cash
flow statement. The Board decided to approach the project in two phases. Phase A would address the
statements that constitute a complete set of financial statements and the periods for which they are required
to be presented. Phase B would be undertaken jointly with the FASB and would address more fundamental
issues relating to presentation and display of information in the financial statements, including:

a. consistent principles for aggregating information in each financial statement.

b. the totals and subtotals that should be reported in each financial statement.

c. whether components of other comprehensive income should be reclassified to profit or loss and,
if so, the characteristics of the transactions and events that should be reclassified and when
reclassification should be made.

d. whether the direct or the indirect method of presenting operating cash flows provides more useful
information.

BC9 In March 2006, as a result of its work in phase A, the Board published an exposure draft of proposed
amendments to IAS 1—A Revised Presentation. The Board received more than 130 comment letters. The
exposure draft proposed amendments that affected the presentation of owner changes in equity and the
presentation of comprehensive income, but did not propose to change the recognition, measurement or
disclosure of specific transactions and other events required by other IFRSs. It also proposed to bring IAS 1

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largely into line with the US standard—SFAS 130 Reporting Comprehensive Income. After considering the
responses to the exposure draft the Board issued a revised version of IAS 1. The FASB decided to consider
phases A and B issues together, and therefore did not publish an exposure draft on phase A.
BC10 The following sections summarise the Board’s considerations in reaching its conclusions as part of its
revision in 2007:

a. general purpose financial statements (paragraphs BC11–BC13)

b. titles of financial statements (paragraphs BC14–BC21)

c. equal prominence (paragraph BC22)

d. a statement of financial position as at the beginning of the earliest comparative period

(paragraphs BC31 and BC32)

e. IAS 34 Interim Financial Reporting (paragraph BC33)

f. reporting owner and non-owner changes in equity (paragraphs BC37 and BC38)

g. reporting comprehensive income (paragraphs BC49–BC54)

h. subtotal for profit or loss (paragraphs BC57 and BC58)

i. other comprehensive income-related tax effects (paragraphs BC65–BC68)

j. reclassification adjustments (paragraphs BC69–BC73)

k. effects of retrospective application or retrospective restatement (paragraph BC74)

l. presentation of dividends (paragraph BC75)

m. IAS 7 Cash Flow Statements (paragraph BC76)

n. presentation of measures per share (paragraphs BC101–BC104)

o. effective date and transition (paragraph BC105)

p. differences from SFAS 130 (paragraph BC106).

Definitions
General purpose financial statements (paragraph 7)
BC11 The exposure draft of 2006 proposed a change to the explanatory paragraph of what ‘general
purpose financial statements’ include, in order to produce a more generic definition of a set of financial
statements. Paragraph 7 of the exposure draft stated:

General purpose financial statements include those that are presented separately or within other
public documents such as a regulatory filing or report to shareholders. [emphasis added]

BC12 Respondents expressed concern about the proposed change. They argued that it could be
understood as defining as general purpose financial statements any financial statement or set of financial
statements filed with a regulator and could capture documents other than annual reports and prospectuses.
They saw this change as expanding the scope of IAS 1 to documents that previously would not have
contained all of the disclosures required by IAS 1. Respondents pointed out that the change would
particularly affect some entities (such as small private companies and subsidiaries of public companies with
no external users of financial reports) that are required by law to place their financial statements on a public
file.

BC13 The Board acknowledged that in some countries the law requires entities, whether public or private, to
report to regulatory authorities and include information in those reports that could be beyond the scope of IAS
1. Because the Board did not intend to extend the definition of general purpose financial statements, it
decided to eliminate the explanatory paragraph of what ‘general purpose financial statements’ include, while

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retaining the definition of ‘general purpose financial statements’.

Financial statements
Complete set of financial statements
Titles of financial statements (paragraph 10)
BC14 The exposure draft of 2006 proposed changes to the titles of some of the financial statements—from
‘balance sheet’ to ‘statement of financial position’, from ‘income statement’ to ‘statement of profit or loss’ and
from ‘cash flow statement’ to ‘statement of cash flows’. In addition, the exposure draft proposed a ‘statement
of recognised income and expense’ and that all owner changes in equity should be included in a ‘statement
of changes in equity’. The Board did not propose to make any of these changes of nomenclature mandatory.
BC15 Many respondents opposed the proposed changes, pointing out that the existing titles had a long
tradition and were well understood. However, the Board reaffirmed its view that the proposed new titles better
reflect the function of each financial statement, and pointed out that an entity could choose to use other titles
in its financial report.
BC16 The Board reaffirmed its conclusion that the title ‘statement of financial position’ not only better
reflects the function of the statement but is consistent with the Framework for the Preparation and
Presentation of Financial Statements, which contains several references to ‘financial position’. Paragraph 12
of the Framework states that the objective of financial statements is to provide information about the financial
position, performance and changes in financial position of an entity; paragraph 19 of the Framework states
that information about financial position is primarily provided in a balance sheet. In the Board’s view, the title
‘balance sheet’ simply reflects that double entry bookkeeping requires debits to equal credits. It does not
identify the content or purpose of the statement. The Board also noted that ‘financial position’ is a well-known
and accepted term, as it has been used in auditors’ opinions internationally for more than 20 years to
describe what the ‘balance sheet’ presents. The Board decided that aligning the statement’s title with its
content and the opinion rendered by the auditor would help the users of financial statements.
BC17 As to the other statements, respondents suggested that renaming the balance sheet the ‘statement of
financial position’ implied that the ‘cash flow statement’ and the ‘statement of recognised income and
expense’ do not also reflect an entity’s financial position. The Board observed that although the latter
statements reflect changes in an entity’s financial position, neither can be called a ‘statement of changes in
financial position’, as this would not depict their true function and objective (ie to present cash flows and
performance, respectively). The Board acknowledged that the titles ‘income statement’ and ‘statement of
profit or loss’ are similar in meaning and could be used interchangeably, and decided to retain the title
‘income statement’ as this is more commonly used.
BC18 The title of the proposed new statement, the ‘statement of recognised income and expense’, reflects a
broader content than the former ‘income statement’. The statement encompasses both income and expenses
recognised in profit or loss and income and expenses recognised outside profit or loss.
BC19 Many respondents opposed the title ‘statement of recognised income and expense’, objecting
particularly to the use of the term ‘recognised’. The Board acknowledged that the term ‘recognised’ could also
be used to describe the content of other primary statements as ‘recognition’, explained in paragraph 82 of the
Framework, is ‘the process of incorporating in the balance sheet or income statement an item that meets the
definition of an element and satisfies the criteria for recognition set out in paragraph 83.’ Many respondents
suggested the term ‘statement of comprehensive income’ instead.

BC20 In response to respondents’ concerns and to converge with SFAS 130, the Board decided to rename
the new statement a ‘statement of comprehensive income’. The term ‘comprehensive income’ is not defined
in the Framework but is used in IAS 1 to describe the change in equity of an entity during a period from
transactions, events and circumstances other than those resulting from transactions with owners in their
capacity as owners. Although the term ‘comprehensive income’ is used to describe the aggregate of all
components of comprehensive income, including profit or loss, the term ‘other comprehensive income’ refers
to income and expenses that under IFRSs are included in comprehensive income but excluded from profit or
loss.

BC20A In May 2010 the Board published the exposure draft Presentation of Items of Other Comprehensive
Income (proposed amendments to IAS 1) relating to the presentation of items of other comprehensive income
(OCI). One of the proposals in the exposure draft related to the title of the statement containing profit or loss
and other comprehensive income. The Board proposed this change so that it would be clear that the
statement had two components: profit or loss and other comprehensive income. A majority of the

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respondents to the exposure draft supported the change and therefore the Board confirmed the proposal in
June 2011. IAS 1 allows preparers to use other titles for the statement that reflect the nature of their activities.
BC20B Several other IFRSs refer to the ‘statement of comprehensive income’. The Board considered
whether it should change all such references to ‘statement of profit or loss and other comprehensive income’.
The Board noted that the terminology used in IAS 1 is not mandatory and that ‘statement of comprehensive
income’ is one of the examples used in the standard. The Board decided that there was little benefit in
replacing the title ‘statement of comprehensive income’ in other IFRSs or ‘income statement’ with the
‘statement of profit or loss’. However, the Board did change the terminology when an IFRS made reference to
the two-statement option.
BC21 In finalising its revision, the Board confirmed that the titles of financial statements used in this
Standard would not be mandatory. The titles will be used in future IFRSs but are not required to be used by
entities in their financial statements. Some respondents to the exposure draft expressed concern that non-
mandatory titles will result in confusion. However, the Board believes that making use of the titles non-
mandatory will allow time for entities to implement changes gradually as the new titles become more familiar.
Equal prominence (paragraphs 11 and 12)
BC22 The Board noted that the financial performance of an entity is not assessed by reference to a single
financial statement or a single measure within a financial statement. The Board believes that the financial
performance of an entity can be assessed only after all aspects of the financial statements are taken into
account and understood in their entirety. Accordingly, the Board decided that in order to help users of the
financial statements to understand the financial performance of an entity comprehensively, all financial
statements within the complete set of financial statements should be presented with equal prominence.

Departures from IFRSs (paragraphs 19–24)

BC23 IAS 1 (as issued in 1997) permitted an entity to depart from a requirement in a Standard ‘in the
extremely rare circumstances when management concludes that compliance with a requirement in a
Standard would be misleading, and therefore that departure from a requirement is necessary to achieve a fair
presentation’ (paragraph 17, now paragraph 19). When such a departure occurred, paragraph 18 (now
paragraph 20) required extensive disclosure of the facts and circumstances surrounding the departure and
the treatment adopted.

BC24 The Board decided to clarify in paragraph 15 of the Standard that for financial statements to present
fairly the financial position, financial performance and cash flows of an entity, they must represent faithfully
the effects of transactions and other events in accordance with the definitions and recognition criteria for
assets, liabilities, income and expenses set out in the Framework.
BC25 The Board decided to limit the occasions on which an entity should depart from a requirement in an
IFRS to the extremely rare circumstances in which management concludes that compliance with the
requirement would be so misleading that it would conflict with the objective of financial statements set out in
the Framework. Guidance on this criterion states that an item of information would conflict with the objective
of financial statements when it does not represent faithfully the transactions, other events or conditions that it
either purports to represent or could reasonably be expected to represent and, consequently, it would be
likely to influence economic decisions made by users of financial statements.
BC26 These amendments provide a framework within which an entity assesses how to present fairly the
effects of transactions, other events and conditions, and whether the result of complying with a requirement in
an IFRS would be so misleading that it would not give a fair presentation.

BC27 The Board considered whether IAS 1 should be silent on departures from IFRSs. The Board decided
against making that change, because it would remove the Board’s capability to specify the criteria under
which departures from IFRSs should occur.
BC28 Departing from a requirement in an IFRS when considered necessary to achieve a fair presentation
would conflict with the regulatory framework in some jurisdictions. The revised IAS 1 takes into account the
existence of different regulatory requirements. It requires that when an entity’s circumstances satisfy the
criterion described in paragraph BC25 for departure from a requirement in an IFRS, the entity should proceed
as follows:

a. When the relevant regulatory framework requires—or otherwise does not prohibit—a departure

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from the requirement, the entity should make that departure and the disclosures set out in
paragraph 20.

b. When the relevant regulatory framework prohibits departure from the requirement, the entity
should, to the maximum extent possible, reduce the perceived misleading aspects of compliance
by making the disclosures set out in paragraph 23.

This amendment enables entities to comply with the requirements of IAS 1 when the relevant regulatory
framework prohibits departures from accounting standards, while retaining the principle that entities should,
to the maximum extent possible, ensure that financial statements provide a fair presentation.

BC29 After considering the comments received on the exposure draft of 2002, the Board added to IAS 1 a
requirement in paragraph 21 to disclose the effect of a departure from a requirement of an IFRS in a prior
period on the current period’s financial statements. Without this disclosure, users of the entity’s financial
statements could be unaware of the continuing effects of prior period departures.
BC30 In view of the strict criteria for departure from a requirement in an IFRS, IAS 1 includes a rebuttable
presumption that if other entities in similar circumstances comply with the requirement, the entity’s
compliance with the requirement would not be so misleading that it would conflict with the objective of
financial statements set out in the Framework.

Comparative information
A statement of financial position as at the beginning of the earliest comparative period (paragraph 39)
BC31 The exposure draft of 2006 proposed that a statement of financial position as at the beginning of the
earliest comparative period should be presented as part of a complete set of financial statements. This
statement would provide a basis for investors and creditors to evaluate information about the entity’s
performance during the period. However, many respondents expressed concern that the requirement would
unnecessarily increase disclosures in financial statements, or would be impracticable, excessive and costly.

BC32 By adding a statement of financial position as at the beginning of the earliest comparative period, the
exposure draft proposed that an entity should present three statements of financial position and two of each
of the other statements. Considering that financial statements from prior years are readily available for
financial analysis, the Board decided to require only two statements of financial position, except when the
financial statements have been affected by retrospective application or retrospective restatement, as defined
in IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, or when a reclassification has
been made. In those circumstances three statements of financial position are required.
Clarification of requirements for comparative information
BC32A In Annual Improvements 2009–2011 Cycle (issued in May 2012) the Board addressed a request to
clarify the requirements for providing comparative information for:

a. the comparative requirements for the opening statement of financial position when an entity
changes accounting policies, or makes retrospective restatements or reclassifications, in
accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors; and

b. the requirements for providing comparative information when an entity provides financial
statements beyond the minimum comparative information requirements.

Opening Statement Of Financial Position

BC32B In Annual Improvements 2009–2011 Cycle (issued in May 2012) the Board addressed a request to
clarify the appropriate date for the opening statement of financial position. The Board decided to amend the
current requirements in IAS 1 that relate to the presentation of a statement of financial position for the
beginning of the earliest comparative period presented in cases of changes in accounting policies,
retrospective restatements or reclassifications to clarify that the appropriate date for the opening statement of
financial position is the beginning of the preceding period.
BC32C The Board also decided to change the previous requirements so that related notes to this opening
statement of financial position are no longer required to be presented. The Board’s decision to give this relief
was based on the fact that circumstances in which an entity changes an accounting policy, or makes a

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retrospective restatement or a reclassification in accordance with IAS 8, are considered narrow, specific and
limited. However, the circumstances in which an entity chooses to provide additional financial statements (ie
on a voluntary basis) can be viewed as more generic and may arise for different reasons. Accordingly, this
relief is not available when additional financial statements are provided on a voluntary basis.
BC32D The Board added the guidance in paragraph 40A(a) to clarify when an opening statement of
financial position provides useful information and, should therefore be required. Paragraph 40A(b) is a
reminder that the concept of materiality should be considered in applying the guidance in paragraph 40A(a).
The Board noted that the entity would still be required to disclose the information required by IAS 8 for
changes in accounting policies and retrospective restatements.

Comparative Information Beyond Minimum Requirements

BC32E In Annual Improvements 2009–2011 Cycle (issued in May 2012) the Board addressed a request to
clarify the requirements for providing comparative information. Specifically, the Board was asked to consider
whether an entity should be required to present a complete set of financial statements when it provides
financial statements beyond the minimum comparative information requirements (ie additional comparative
information). In response to this request, the Board decided to clarify that additional financial statement
information need not be presented in the form of a complete set of financial statements for periods beyond
the minimum requirements. The Board also noted that additional comparative information might include:

a. information that is presented voluntarily, beyond the information that is included within a complete
set of financial statements; or

b. comparative information that is required by law or other regulations but that is not required by
IFRSs.

BC32F The Board also decided to amend paragraphs 38–41 of IAS 1 to clarify that, when additional
comparative information (that is not required by IFRSs) is provided by an entity, this information should be
presented in accordance with IFRSs and the entity should present comparative information in the related
notes for that additional information. The Board determined that requiring full notes for additional information
in accordance with paragraph 38C is necessary to ensure that the additional information that the entity
provides is balanced and results in financial statements that achieve a fair presentation.
BC32G In the light of the concerns raised by interested parties, the Board decided that the amendments
should be introduced through the Annual Improvements process instead of through the Financial Statement
Presentation project, so that the changes could be made more quickly.
IAS 34 Interim Financial Reporting

BC33 The Board decided not to reflect in paragraph 8 of IAS 34 (ie the minimum components of an interim
financial report) its decision to require the inclusion of a statement of financial position as at the beginning of
the earliest comparative period in a complete set of financial statements. IAS 34 has a year-to-date approach
to interim reporting and does not replicate the requirements of IAS 1 in terms of comparative information.
Criterion for exemption from requirements (paragraphs 41–44)

BC34 IAS 1 as issued in 1997 specified that when the presentation or classification of items in the financial
statements is amended, comparative amounts should be reclassified unless it is impracticable to do so.
Applying a requirement is impracticable when the entity cannot apply it after making every reasonable effort
to do so.
BC35 The exposure draft of 2002 proposed a different criterion for exemption from particular requirements.
For the reclassification of comparative amounts, and its proposed new requirement to disclose key
assumptions and other sources of estimation uncertainty at the end of the reporting period (discussed in
paragraphs BC79–BC84), the exposure draft proposed that the criterion for exemption should be that
applying the requirements would require undue cost or effort.
BC36 In the light of respondents’ comments on the exposure draft, the Board decided that an exemption
based on management’s assessment of undue cost or effort was too subjective to be applied consistently by
different entities. Moreover, balancing costs and benefits was a task for the Board when it sets accounting
requirements rather than for entities when they apply them. Therefore, the Board retained the
‘impracticability’ criterion for exemption. This affects the exemptions now set out in paragraphs 41–43 and

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131 of IAS 1. Impracticability is the only basis on which IFRSs allow specific exemptions from applying
particular requirements when the effect of applying them is material.20

Reporting owner and non-owner changes in equity

BC37 The exposure draft of 2006 proposed to separate changes in equity of an entity during a period
arising from transactions with owners in their capacity as owners (ie all owner changes in equity) from other
changes in equity (ie non-owner changes in equity). All owner changes in equity would be presented in the
statement of changes in equity, separately from non-owner changes in equity.
BC38 Most respondents welcomed this proposal and saw this change as an improvement of financial
reporting, by increasing the transparency of those items recognised in equity that are not reported as part of
profit or loss. However, some respondents pointed out that the terms ‘owner’ and ‘non-owner’ were not
defined in the exposure draft, the Framework or elsewhere in IFRSs, although they are extensively used in
national accounting standards. They also noted that the terms ‘owner’ and ‘equity holder’ were used
interchangeably in the exposure draft. The Board decided to adopt the term ‘owner’ and use it throughout IAS
1 to converge with SFAS 130, which uses the term in the definition of ‘comprehensive income’.

Statement of financial position

Current assets and current liabilities (paragraphs 68 and 71)
BC38A As part of its improvements project in 2007, the Board identified inconsistent guidance regarding the
current/non-current classification of derivatives. Some might read the guidance included in paragraph 71 as
implying that financial liabilities classified as held for trading in accordance with IAS 39 Financial Instruments:
Recognition and Measurement21 are always required to be presented as current.
BC38B The Board expects the criteria set out in paragraph 69 to be used to assess whether a financial
liability should be presented as current or non-current. The ‘held for trading’ category in paragraph 9 of IAS
3922 is for measurement purposes and includes financial assets and liabilities that may not be held primarily
for trading purposes.
BC38C The Board reaffirmed that if a financial liability is held primarily for trading purposes it should be
presented as current regardless of its maturity date. However, a financial liability that is not held for trading
purposes, such as a derivative that is not a financial guarantee contract or a designated hedging instrument,
should be presented as current or non-current on the basis of its settlement date. For example, derivatives
that have a maturity of more than twelve months and are expected to be held for more than twelve months
after the reporting period should be presented as non-current assets or liabilities.
BC38D Therefore, the Board decided to remove the identified inconsistency by amending the examples of
current liabilities in paragraph 71. The Board also amended paragraph 68 in respect of current assets to
remove a similar inconsistency.

Classification of the liability component of a convertible instrument ( paragraph 69)

BC38E As part of its improvements project in 2007, the Board considered the classification of the liability
component of a convertible instrument as current or non-current. Paragraph 69(d) of IAS 1 states that when
an entity does not have an unconditional right to defer settlement of a liability for at least twelve months after
the reporting period, the liability should be classified as current. According to the Framework, conversion of a
liability into equity is a form of settlement.
BC38F The application of these requirements means that if the conversion option can be exercised by the
holder at any time, the liability component would be classified as current. This classification would be required
even if the entity would not be required to settle unconverted instruments with cash or other assets for more
than twelve months after the reporting period.
BC38G IAS 1 and the Framework state that information about the liquidity and solvency positions of an
entity is useful to users. The terms ‘liquidity’ and ‘solvency’ are associated with the availability of cash to an
entity. Issuing equity does not result in an outflow of cash or other assets of the entity.
BC38H The Board concluded that classifying the liability on the basis of the requirements to transfer cash or
other assets rather than on settlement better reflects the liquidity and solvency position of an entity, and
therefore it decided to amend IAS 1 accordingly.

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BC38I The Board discussed the comments received in response to its exposure draft of proposed
Improvements to IFRSs published in 2007 and noted that some respondents were concerned that the
proposal in the exposure draft would apply to all liabilities, not just those that are components of convertible
instruments as originally contemplated in the exposure draft. Consequently, in Improvements to IFRSs issued
in April 2009, the Board amended the proposed wording to clarify that the amendment applies only to the
classification of a liability that can, at the option of the counterparty, be settled by the issue of the entity’s
equity instruments.

Effect of events after the reporting period on the classification of liabilities (paragraphs
69–76)
BC39 Paragraph 63 of IAS 1 (as issued in 1997) included the following:

An enterprise should continue to classify its long-term interest-bearing liabilities as non-current, even
when they are due to be settled within twelve months of the balance sheet date if:

a. the original term was for a period of more than twelve months;

b. the enterprise intends to refinance the obligation on a long-term basis; and

c. that intention is supported by an agreement to refinance, or to reschedule payments,

which is completed before the financial statements are authorised for issue.

BC40 Paragraph 65 stated:

Some borrowing agreements incorporate undertakings by the borrower (covenants) which have the
effect that the liability becomes payable on demand if certain conditions related to the borrower’s
financial position are breached. In these circumstances, the liability is classified as non-current only
when:

a. the lender has agreed, prior to the authorisation of the financial statements for issue, not
to demand payment as a consequence of the breach; and

b. it is not probable that further breaches will occur within twelve months of the balance
sheet date.

BC41 The Board considered these requirements and concluded that refinancing, or the receipt of a waiver
of the lender’s right to demand payment, that occurs after the reporting period should not be taken into
account in the classification of a liability.
BC42 Therefore, the exposure draft of 2002 proposed:

a. to amend paragraph 63 to specify that a long-term financial liability due to be settled within twelve
months of the balance sheet date should not be classified as a non-current liability because an
agreement to refinance, or to reschedule payments, on a long-term basis is completed after the
balance sheet date and before the financial statements are authorised for issue. This amendment
would not affect the classification of a liability as non-current when the entity has, under the terms
of an existing loan facility, the discretion to refinance or roll over its obligations for at least twelve
months after the balance sheet date.

b. to amend paragraph 65 to specify that a long-term financial liability that is payable on demand
because the entity breached a condition of its loan agreement should be classified as current at
the balance sheet date even if the lender has agreed after the balance sheet date, and before the
financial statements are authorised for issue, not to demand payment as a consequence of the
breach. However, if the lender has agreed by the balance sheet date to provide a period of grace
within which the entity can rectify the breach and during which the lender cannot demand
immediate repayment, the liability is classified as non-current if it is due for settlement, without
that breach of the loan agreement, at least twelve months after the balance sheet date and:

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i. the entity rectifies the breach within the period of grace; or

ii. when the financial statements are authorised for issue, the period of grace is
incomplete and it is probable that the breach will be rectified.

BC43 Some respondents disagreed with these proposals. They advocated classifying a liability as current or
non-current according to whether it is expected to use current assets of the entity, rather than strictly on the
basis of its date of maturity and whether it is callable at the end of the reporting period. In their view, this
would provide more relevant information about the liability’s future effect on the timing of the entity’s resource
flows.
BC44 However, the Board decided that the following arguments for changing paragraphs 63 and 65 were
more persuasive:

a. refinancing a liability after the balance sheet date does not affect the entity’s liquidity and
solvency at the balance sheet date, the reporting of which should reflect contractual
arrangements in force on that date. Therefore, it is a non-adjusting event in accordance with IAS
10 Events after the Balance Sheet Date and should not affect the presentation of the entity’s
balance sheet.

b. it is illogical to adopt a criterion that ‘non-current’ classification of short-term obligations expected

to be rolled over for at least twelve months after the balance sheet date depends on whether the
roll-over is at the discretion of the entity, and then to provide an exception based on refinancing
occurring after the balance sheet date.

c. in the circumstances set out in paragraph 65, unless the lender has waived its right to demand
immediate repayment or granted a period of grace within which the entity may rectify the breach
of the loan agreement, the financial condition of the entity at the balance sheet date was that the
entity did not hold an absolute right to defer repayment, based on the terms of the loan
agreement. The granting of a waiver or a period of grace changes the terms of the loan
agreement. Therefore, an entity’s receipt from the lender, after the balance sheet date, of a
waiver or a period of grace of at least twelve months does not change the nature of the liability to
non-current until it occurs.

BC45 IAS 1 now includes the amendments proposed in 2002, with one change. The change relates to the
classification of a long-term loan when, at the end of the reporting period, the lender has provided a period of
grace within which a breach of the loan agreement can be rectified, and during which period the lender
cannot demand immediate repayment of the loan.
BC46 The exposure draft proposed that such a loan should be classified as non-current if it is due for
settlement, without the breach, at least twelve months after the balance sheet date and:

a. the entity rectifies the breach within the period of grace; or

b. when the financial statements are authorised for issue, the period of grace is incomplete and it is
probable that the breach will be rectified.

BC47 After considering respondents’ comments, the Board decided that the occurrence or probability of a
rectification of a breach after the reporting period is irrelevant to the conditions existing at the end of the
reporting period. The revised IAS 1 requires that, for the loan to be classified as non-current, the period of
grace must end at least twelve months after the reporting period (see paragraph 75). Therefore, the
conditions (a) and (b) in paragraph BC46 are redundant.
BC48 The Board considered arguments that if a period of grace to remedy a breach of a long-term loan
agreement is provided before the end of the reporting period, the loan should be classified as non-current
regardless of the length of the period of grace. These arguments are based on the view that, at the end of the
reporting period, the lender does not have an unconditional legal right to demand repayment before the
original maturity date (ie if the entity remedies the breach during the period of grace, it is entitled to repay the
loan on the original maturity date). However, the Board concluded that an entity should classify a loan as

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non-current only if it has an unconditional right to defer settlement of the loan for at least twelve months after
the reporting period. This criterion focuses on the legal rights of the entity, rather than those of the lender.

Statement of comprehensive income

Reporting comprehensive income (paragraph 81)
BC49 The exposure draft of 2006 proposed that all non-owner changes in equity should be presented in a
single statement or in two statements. In a single-statement presentation, all items of income and expense
are presented together. In a two-statement presentation, the first statement (‘income statement’) presents
income and expenses recognised in profit or loss and the second statement (‘statement of comprehensive
income’) begins with profit or loss and presents, in addition, items of income and expense that IFRSs require
or permit to be recognised outside profit or loss. Such items include, for example, translation differences
related to foreign operations and gains or losses on available-for-sale23 financial assets. The statement of
comprehensive income does not include transactions with owners in their capacity as owners. Such
transactions are presented in the statement of changes in equity.
BC50 Respondents to the exposure draft had mixed views about whether the Board should permit a choice
of displaying non-owner changes in equity in one statement or two statements. Many respondents agreed
with the Board’s proposal to maintain the two-statement approach and the single-statement approach as
alternatives and a few urged the Board to mandate one of them. However, most respondents preferred the
two-statement approach because it distinguishes profit or loss and total comprehensive income; they believe
that with the two-statement approach, the ‘income statement’ remains a primary financial statement.
Respondents supported the presentation of two separate statements as a transition measure until the Board
develops principles to determine the criteria for inclusion of items in profit or loss or in other comprehensive
income.
BC51 The exposure draft of 2006 expressed the Board’s preference for a single statement of all non-owner
changes in equity. The Board provided several reasons for this preference. All items of non-owner changes in
equity meet the definitions of income and expenses in the Framework. The Framework does not define profit
or loss, nor does it provide criteria for distinguishing the characteristics of items that should be included in
profit or loss from those items that should be excluded from profit or loss. Therefore, the Board decided that it
was conceptually correct for an entity to present all non-owner changes in equity (ie all income and expenses
recognised in a period) in a single statement because there are no clear principles or common characteristics
that can be used to separate income and expenses into two statements.

BC52 However, in the Board’s discussions with interested parties, it was clear that many were strongly
opposed to the concept of a single statement. They argued that there would be undue focus on the bottom
line of the single statement. In addition, many argued that it was premature for the Board to conclude that
presentation of income and expense in a single statement was an improvement in financial reporting without
also addressing the other aspects of presentation and display, namely deciding what categories and line
items should be presented in a statement of recognised income and expense.
BC53 In the light of these views, although it preferred a single statement, the Board decided that an entity
should have the choice of presenting all income and expenses recognised in a period in one statement or in
two statements. An entity is prohibited from presenting components of income and expense (ie non-owner
changes in equity) in the statement of changes in equity.

BC54 Many respondents disagreed with the Board’s preference and thought that a decision at this stage
would be premature. In their view the decision about a single-statement or two-statement approach should be
subject to further consideration. They urged the Board to address other aspects of presentation and display,
namely deciding which categories and line items should be presented in a ‘statement of comprehensive
income’. The Board reaffirmed its reasons for preferring a single-statement approach and agreed to address
other aspects of display and presentation in the next stage of the project.
BC54A In Presentation of Items of Other Comprehensive Income published in May 2010 the Board
proposed to eliminate the option to present all items of income and expense recognised in a period in two
statements, thereby requiring presentation in a continuous statement displaying two sections: profit or loss
and other comprehensive income. The Board also proposed to require items of OCI to be classified into items
that might be reclassified (recycled) to profit or loss in subsequent periods and items that would not be
reclassified subsequently.
BC54B In its deliberations on financial instruments and pensions the Board discussed the increasing
importance of consistent presentation of items of OCI. Both projects will increase the number of items

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presented in OCI, particularly items that will not be reclassified subsequently to profit or loss. Therefore the
Board thought it important that all income and expenses that are components of the total non-owner changes
in equity should be presented transparently.
BC54C The Board has no plans to eliminate profit or loss as a measure of performance. Profit or loss will be
presented separately and will remain the required starting point for the calculation of earnings per share.
BC54D The Board had previously received responses to similar proposals for a single statement of
comprehensive income. In October 2008 the Board and the FASB jointly published a discussion paper,
Preliminary Views on Financial Statement Presentation. In that paper, the boards proposed eliminating the
alternative presentation formats for comprehensive income and to require an entity to present comprehensive
income and its components in a single statement. The boards asked for views on that proposal. The
responses were split on whether an entity should present comprehensive income and its components in a
single statement or in two separate statements. In general, respondents supporting a single statement of
comprehensive income said that it would lead to greater transparency, consistency and comparability.
Furthermore, the process of calculating financial ratios would be made easier.
BC54E Respondents disagreeing with the proposal for a single statement of comprehensive income urged
the boards to defer any changes to the guidance on the statement of comprehensive income until the boards
had completed a project to revise the guidance on what items should be presented in OCI. Those
respondents also said that a single statement would undermine the importance of profit or loss by making it a
subtotal and that presenting total comprehensive income as the last number in the statement would confuse
users. They also feared that requiring all items of income and expense to be presented in a single statement
was the first step by the boards towards eliminating the notion of profit or loss. In addition, they argued that
the items that are presented in OCI are different from items presented in profit or loss. Therefore they
preferred either to keep the presentation of profit or loss separate from the presentation of OCI or to allow
management to choose to present them either in a single statement or in two statements.
BC54F In the responses to the exposure draft of May 2010 many of the respondents objected to the
proposals to remove the option to present all items of income and expense in two statements. The arguments
used by those objecting were much the same as those received on the discussion paper. However, many
respondents, regardless of their views on the proposed amendments, said that the Board should establish a
conceptual basis for what should be presented in OCI. Those opposed to a continuous statement cited OCI’s
lack of a conceptual definition and therefore believed that OCI should not be presented in close proximity to
profit or loss because this would confuse users. However, users generally said that the lack of a conceptual
framework made it difficult to distinguish the underlying economics of items reported in profit or loss (net
income) from items reported in other comprehensive income. Although users also asked for a conceptual
framework for OCI, most supported the notion of a single statement of comprehensive income.

BC54G Another issue on which many respondents commented was the reclassification (recycling) of OCI
items. Those respondents said that in addition to addressing the conceptual basis for the split between profit
or loss and OCI the Board should set principles for which OCI items should be reclassified (recycled) to profit
or loss and when they should be reclassified. The Board acknowledges that it has not set out a conceptual
basis for how it determines whether an item should be presented in OCI or in profit or loss. It also agrees that
it has not set out principles to determine whether items should be reclassified to profit or loss. Those matters
were not within the scope of this project, which focused on presentation, and therefore the Board has not
addressed them at this time. However, the Board is consulting on its future agenda, which could lead to those
matters becoming part of the work programme.

BC54H In the light of the response the Board confirmed in June 2011 the requirement for items of OCI to be
classified into items that will not be reclassified (recycled) to profit or loss in subsequent periods and items
that might be reclassified.
BC54I The Board also decided not to mandate the presentation of profit or loss in a continuous statement of
profit or loss and other comprehensive income but to maintain an option to present two statements. The
Board did this in the light of the negative response to its proposal for a continuous statement and the
resistance to this change signified by a majority of respondents.
BC54J The FASB also proposed in its exposure draft to mandate a continuous statement of comprehensive
income but decided in the light of the responses not to go as far as mandating a single statement and instead
to allow the two-statement option. Nevertheless, the changes made by the FASB are a significant
improvement for US GAAP, which previously allowed an option to present OCI items in stockholders’ equity
or in the notes to the financial statements.

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Results of operating activities

BC55 IAS 1 omits the requirement in the 1997 version to disclose the results of operating activities as a line
item in the income statement. ‘Operating activities’ are not defined in IAS 1, and the Board decided not to
require disclosure of an undefined item.
BC56 The Board recognises that an entity may elect to disclose the results of operating activities, or a
similar line item, even though this term is not defined. In such cases, the Board notes that the entity should
ensure that the amount disclosed is representative of activities that would normally be regarded as
‘operating’. In the Board’s view, it would be misleading and would impair the comparability of financial
statements if items of an operating nature were excluded from the results of operating activities, even if that
had been industry practice. For example, it would be inappropriate to exclude items clearly related to
operations (such as inventory write-downs and restructuring and relocation expenses) because they occur
irregularly or infrequently or are unusual in amount. Similarly, it would be inappropriate to exclude items on
the grounds that they do not involve cash flows, such as depreciation and amortisation expenses.

Subtotal for profit or loss (paragraph 82)

BC57 As revised, IAS 1 requires a subtotal for profit or loss in the statement of comprehensive income. If an
entity chooses to present comprehensive income by using two statements, it should begin the second
statement with profit or loss—the bottom line of the first statement (the ‘income statement’)—and display the
components of other comprehensive income immediately after that. The Board concluded that this is the best
way to achieve the objective of equal prominence (see paragraph BC22) for the presentation of income and
expenses. An entity that chooses to display comprehensive income in one statement should include profit or
loss as a subtotal within that statement.
BC58 The Board acknowledged that the items included in profit or loss do not possess any unique
characteristics that allow them to be distinguished from items that are included in other comprehensive
income. However, the Board and its predecessor have required some items to be recognised outside profit or
loss. The Board will deliberate in the next stage of the project how items of income and expense should be
presented in the statement of comprehensive income.

Minority interest (paragraph 83)24

BC59 IAS 1 requires the ‘profit or loss attributable to minority interest’ and ‘profit or loss attributable to
owners of the parent’ each to be presented in the income statement in accordance with paragraph 83. These
amounts are to be presented as allocations of profit or loss, not as items of income or expense. A similar
requirement has been added for the statement of changes in equity, in paragraph 106(a). These changes are
consistent with IAS 27 Consolidated and Separate Financial Statements, which requires that in a
consolidated balance sheet (now called ‘statement of financial position’), minority interest is presented within
equity because it does not meet the definition of a liability in the Framework.

Extraordinary items (paragraph 87)

BC60 IAS 8 Net Profit or Loss for the Period, Fundamental Errors and Changes in Accounting Policies
(issued in 1993) required extraordinary items to be disclosed in the income statement separately from the
profit or loss from ordinary activities. That standard defined ‘extraordinary items’ as ‘income or expenses that
arise from events or transactions that are clearly distinct from the ordinary activities of the enterprise and
therefore are not expected to recur frequently or regularly’.
BC61 In 2002, the Board decided to eliminate the concept of extraordinary items from IAS 8 and to prohibit
the presentation of items of income and expense as ‘extraordinary items’ in the income statement and the
notes. Therefore, in accordance with IAS 1, no items of income and expense are to be presented as arising
from outside the entity’s ordinary activities.
BC62 Some respondents to the exposure draft of 2002 argued that extraordinary items should be presented
in a separate component of the income statement because they are clearly distinct from all of the other items
of income and expense, and because such presentation highlights to users of financial statements the items
of income and expense to which the least attention should be given when predicting an entity’s future
performance.
BC63 The Board decided that items treated as extraordinary result from the normal business risks faced by
an entity and do not warrant presentation in a separate component of the income statement. The nature or

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function of a transaction or other event, rather than its frequency, should determine its presentation within the
income statement. Items currently classified as ‘extraordinary’ are only a subset of the items of income and
expense that may warrant disclosure to assist users in predicting an entity’s future performance.
BC64 Eliminating the category of extraordinary items eliminates the need for arbitrary segregation of the
effects of related external events—some recurring and others not—on the profit or loss of an entity for a
period. For example, arbitrary allocations would have been necessary to estimate the financial effect of an
earthquake on an entity’s profit or loss if it occurs during a major cyclical downturn in economic activity. In
addition, paragraph 97 of IAS 1 requires disclosure of the nature and amount of material items of income and
expense.

Other comprehensive income—related tax effects (paragraphs 90 and 91)

BC65 The exposure draft of 2006 proposed to allow components of ‘other recognised income and
expense’ (now ‘other comprehensive income’) to be presented before tax effects (‘gross presentation’) or
after their related tax effects (‘net presentation’). The ‘gross presentation’ facilitated the traceability of other
comprehensive income items to profit or loss, because items of profit or loss are generally displayed before
tax. The ‘net presentation’ facilitated the identification of other comprehensive income items in the equity
section of the statement of financial position. A majority of respondents supported allowing both approaches.
The Board reaffirmed its conclusion that components of other comprehensive income could be displayed
either (a) net of related tax effects or (b) before related tax effects.
BC66 Regardless of whether a pre-tax or post-tax display was used, the exposure draft proposed to require
disclosure of the amount of income tax expense or benefit allocated separately to individual components of
other comprehensive income, in line with SFAS 130. Many respondents agreed in principle with this
disclosure, because they agreed that it helped to improve the clarity and transparency of such information,
particularly when components of other comprehensive income are taxed at rates different from those applied
to profit or loss.
BC67 However, most respondents expressed concern about having to trace the tax effect for each one of
the components of other comprehensive income. Several observed that the tax allocation process is arbitrary
(eg it may involve the application of subjectively determined tax rates) and some pointed out that this
information is not readily available for some industries (eg the insurance sector), where components of other
comprehensive income are multiple and tax allocation involves a high degree of subjectivity. Others
commented that they did not understand why tax should be attributed to components of comprehensive
income line by line, when this is not a requirement for items in profit or loss.
BC68 The Board decided to maintain the disclosure of income tax expense or benefit allocated to each
component of other comprehensive income. Users of financial statements often requested further information
on tax amounts relating to components of other comprehensive income, because tax rates often differed from
those applied to profit or loss. The Board also observed that an entity should have such tax information
available and that a disclosure requirement would therefore not involve additional cost for preparers of
financial statements.
BC68A In its exposure draft Presentation of Items of Other Comprehensive Income published in May 2010
the Board proposed requiring that income tax on items presented in OCI should be allocated between items
that will not be subsequently reclassified to profit or loss and those that might be reclassified, if the items in
OCI are presented before tax. Most respondents agreed with this proposal as this would be in line with the
existing options in IAS 1 regarding presentation of income tax on OCI items. Therefore the Board confirmed
the proposal in June 2011.

Reclassification adjustments (paragraphs 92–96)

BC69 In the exposure draft of 2006, the Board proposed that an entity should separately present
reclassification adjustments. These adjustments are the amounts reclassified to profit or loss in the current
period that were previously recognised in other comprehensive income. The Board decided that adjustments
necessary to avoid double-counting items in total comprehensive income when those items are reclassified to
profit or loss in accordance with IFRSs. The Board’s view was that separate presentation of reclassification
adjustments is essential to inform users of those amounts that are included as income and expenses in
different periods—as income or expenses in other comprehensive income in previous periods and as income
or expenses in profit or loss in the current period. Without such information, users may find it difficult to
assess the effect of reclassifications on profit or loss and to calculate the overall gain or loss associated with
available-for-sale25 financial assets, cash flow hedges and on translation or disposal of foreign operations.

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BC70 Most respondents agreed with the Board’s decision and believe that the disclosure of reclassification
adjustments is important to understanding how components recognised in profit or loss are related to other
items recognised in equity in two different periods. However, some respondents suggested that the Board
should use the term ‘recycling’, rather than ‘reclassification’ as the former term is more common. The Board
concluded that both terms are similar in meaning, but decided to use the term ‘reclassification adjustment’ to
converge with the terminology used in SFAS 130.
BC71 The exposure draft proposed to allow the presentation of reclassification adjustments in the statement
of recognised income and expense (now ‘statement of comprehensive income’) or in the notes. Most
respondents supported this approach.
BC72 Some respondents noted some inconsistencies in the definition of ‘reclassification adjustments’ in the
exposure draft (now paragraphs 7 and 93 of IAS 1). Respondents suggested that the Board should expand
the definition in paragraph 7 to include gains and losses recognised in current periods in addition to those
recognised in earlier periods, to make the definition consistent with paragraph 93. They commented that,
without clarification, there could be differences between interim and annual reporting, for reclassifications of
items that arise in one interim period and reverse out in a different interim period within the same annual
period.
BC73 The Board decided to align the definition of reclassification adjustments with SFAS 130 and include
an additional reference to ‘current periods’ in paragraph 7.

Statement of changes in equity

Effects of retrospective application or retrospective restatement (paragraph 106(b))
BC74 Some respondents to the exposure draft of 2006 asked the Board to clarify whether the effects of
retrospective application or retrospective restatement, as defined in IAS 8, should be regarded as non-owner
changes in equity. The Board noted that IAS 1 specifies that these effects are included in the statement of
changes in equity. However, the Board decided to clarify that the effects of retrospective application or
retrospective restatement are not changes in equity in the period, but provide a reconciliation between the
previous period’s closing balance and the opening balance in the statement of changes in equity.

Reconciliation for each component of other comprehensive income (paragraphs 106(d)(ii)

and 106A)
BC74A [Effective for annual reporting periods beginning on or after 1 January 2011. Refer to paragraph
139F for full effective date information.] Paragraph 106(d) requires an entity to provide a reconciliation of
changes in each component of equity. In Improvements to IFRSs issued in May 2010, the Board clarified that
entities may present the required reconciliations for each component of other comprehensive income either in
the statement of changes in equity or in the notes to the financial statements.

Presentation of dividends (paragraph 107)

BC75 The Board reaffirmed its conclusion to require the presentation of dividends in the statement of
changes in equity or in the notes, because dividends are distributions to owners in their capacity as owners
and the statement of changes in equity presents all owner changes in equity. The Board concluded that an
entity should not present dividends in the statement of comprehensive income because that statement
presents non-owner changes in equity.

Statement of cash flows

IAS 7 Cash Flow Statements(paragraph 111)
BC76 The Board considered whether the operating section of an indirect method statement of cash flows
should begin with total comprehensive income instead of profit or loss as is required by IAS 7 Cash Flow
Statements. When components of other comprehensive income are non-cash items, they would become
reconciling items in arriving at cash flows from operating activities and would add items to the statement of
cash flows without adding information content. The Board concluded that an amendment to IAS 7 is not
required; however, as mentioned in paragraph BC14 the Board decided to relabel this financial statement as
‘statement of cash flows’.

Notes
Disclosure of the judgements that management has made in the process of applying the

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entity’s accounting policies (paragraphs 122–124)

BC77 The revised IAS 1 requires disclosure of the judgements, apart from those involving estimations, that
management has made in the process of applying the entity’s accounting policies and that have the most
significant effect on the amounts recognised in the financial statements (see paragraph 122). An example of
these judgements is how management determines whether financial assets are held-to-maturity
investments26. The Board decided that disclosure of the most important of these judgements would enable
users of financial statements to understand better how the accounting policies are applied and to make
comparisons between entities regarding the basis on which managements make these judgements.
BC78 Comments received on the exposure draft of 2002 indicated that the purpose of the proposed
disclosure was unclear. Accordingly, the Board amended the disclosure explicitly to exclude judgements
involving estimations (which are the subject of the disclosure in paragraph 125) and added another four
examples of the types of judgements disclosed (see paragraphs 123 and 124).

Disclosure of major sources of estimation uncertainty (paragraphs 125–133)

BC79 IAS 1 requires disclosure of the assumptions concerning the future, and other major sources of
estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next financial year. For those assets
and liabilities, the proposed disclosures include details of:

a. their nature; and

b. their carrying amount as at the end of the reporting period (see paragraph 125).

BC80 Determining the carrying amounts of some assets and liabilities requires estimation of the effects of
uncertain future events on those assets and liabilities at the end of the reporting period. For example, in the
absence of recently observed market prices used to measure the following assets and liabilities, future-
oriented estimates are necessary to measure the recoverable amount of classes of property, plant and
equipment, the effect of technological obsolescence of inventories, provisions subject to the future outcome
of litigation in progress, and long-term employee benefit liabilities such as pension obligations. These
estimates involve assumptions about items such as the risk adjustment to cash flows or discount rates used,
future changes in salaries and future changes in prices affecting other costs. No matter how diligently an
entity estimates the carrying amounts of assets and liabilities subject to significant estimation uncertainty at
the end of the reporting period, the reporting of point estimates in the statement of financial position cannot
provide information about the estimation uncertainties involved in measuring those assets and liabilities and
the implications of those uncertainties for the period’s profit or loss.
BC81 The Framework states that ‘The economic decisions that are made by users of financial statements
require an evaluation of the ability of an entity to generate cash and cash equivalents and of the timing and
certainty of their generation.’ The Board decided that disclosure of information about assumptions and other
major sources of estimation uncertainty at the end of the reporting period enhances the relevance, reliability
and understandability of the information reported in financial statements. These assumptions and other
sources of estimation uncertainty relate to estimates that require management’s most difficult, subjective or
complex judgements. Therefore, disclosure in accordance with paragraph 125 of the revised IAS 1 would be
made in respect of relatively few assets or liabilities (or classes of them).
BC82 The exposure draft of 2002 proposed the disclosure of some ‘sources of measurement uncertainty’. In
the light of comments received that the purpose of this disclosure was unclear, the Board decided:

a. to amend the subject of that disclosure to ‘sources of estimation uncertainty at the end of the
reporting period’; and

b. to clarify in the revised Standard that the disclosure does not apply to assets and liabilities
measured at fair value based on recently observed market prices (see paragraph 128 of IAS 1).

BC83 When assets and liabilities are measured at fair value on the basis of recently observed market
prices, future changes in carrying amounts would not result from using estimates to measure the assets and
liabilities at the end of the reporting period. Using observed market prices to measure assets or liabilities

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obviates the need for estimates at the end of the reporting period. The market prices properly reflect the fair
values at the end of the reporting period, even though future market prices could be different. The objective of
fair value measurement is to reflect fair value at the measurement date, not to predict a future value.27
BC84 IAS 1 does not prescribe the particular form or detail of the disclosures. Circumstances differ from
entity to entity, and the nature of estimation uncertainty at the end of the reporting period has many facets.
IAS 1 limits the scope of the disclosures to items that have a significant risk of causing a material adjustment
to the carrying amounts of assets and liabilities within the next financial year. The longer the future period to
which the disclosures relate, the greater the range of items that would qualify for disclosure, and the less
specific are the disclosures that could be made about particular assets or liabilities. A period longer than the
next financial year might obscure the most relevant information with other disclosures.

Disclosures about capital (paragraphs 134 and 135)

BC85 In July 2004 the Board published an exposure draft—ED 7 Financial Instruments: Disclosures. As part
of that project, the Board considered whether it should require disclosures about capital.
BC86 The level of an entity’s capital and how it manages capital are important factors for users to consider
in assessing the risk profile of an entity and its ability to withstand unexpected adverse events. The level of
capital might also affect the entity’s ability to pay dividends. Consequently, ED 7 proposed disclosures about
capital.
BC87 In ED 7 the Board decided that it should not limit the requirements for disclosures about capital to
entities that are subject to external capital requirements (eg regulatory capital requirements established by
legislation or other regulation). The Board believes that information about capital is useful for all entities, as is
evidenced by the fact that some entities set internal capital requirements and norms have been established
for some industries. The Board noted that the capital disclosures are not intended to replace disclosures
required by regulators. The Board also noted that the financial statements should not be regarded as a
substitute for disclosures to regulators (which may not be available to all users) because the function of
disclosures made to regulators may differ from the function of those to other users. Therefore, the Board
decided that information about capital should be required of all entities because it is useful to users of general
purpose financial statements. Accordingly, the Board did not distinguish between the requirements for
regulated and non-regulated entities.
BC88 Some respondents to ED 7 questioned the relevance of the capital disclosures in an IFRS dealing
with disclosures relating to financial instruments. The Board noted that an entity’s capital does not relate
solely to financial instruments and, thus, capital disclosures have more general relevance. Accordingly, the
Board included these disclosures in IAS 1, rather than IFRS 7 Financial Instruments: Disclosures, the IFRS
resulting from ED 7.
BC89 The Board also decided that an entity’s decision to adopt the amendments to IAS 1 should be
independent of the entity’s decision to adopt IFRS 7. The Board noted that issuing a separate amendment
facilitates separate adoption decisions.

Objectives, policies and processes for managing capital (paragraph 136)

BC90 The Board decided that disclosure about capital should be placed in the context of a discussion of the
entity’s objectives, policies and processes for managing capital. This is because the Board believes that such
a discussion both communicates important information about the entity’s capital strategy and provides the
context for other disclosures.
BC91 The Board considered whether an entity can have a view of capital that differs from what IFRSs
define as equity. The Board noted that, although for the purposes of this disclosure capital would often
equate with equity as defined in IFRSs, it might also include or exclude some components. The Board also
noted that this disclosure is intended to give entities the opportunity to describe how they view the
components of capital they manage, if this is different from what IFRSs define as equity.

Externally imposed capital requirements (paragraph 136)

BC92 The Board considered whether it should require disclosure of any externally imposed capital
requirements. Such a capital requirement could be:

a. an industry-wide requirement with which all entities in the industry must comply; or

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b. an entity-specific requirement imposed on a particular entity by its prudential supervisor or other

regulator.

BC93 The Board noted that some industries and countries have industry-wide capital requirements, and
others do not. Thus, the Board concluded that it should not require disclosure of industry-wide requirements,
or compliance with such requirements, because such disclosure would not lead to comparability between
different entities or between similar entities in different countries.
BC94 The Board concluded that disclosure of the existence and level of entity-specific capital requirements
is important information for users, because it informs them about the risk assessment of the regulator. Such
disclosure improves transparency and market discipline.
BC95 However, the Board noted the following arguments against requiring disclosure of externally imposed
entity-specific capital requirements.

a. Users of financial statements might rely primarily on the regulator’s assessment of solvency risk
without making their own risk assessment.

b. The focus of a regulator’s risk assessment is for those whose interests the regulations are
intended to protect (eg depositors or policyholders). This emphasis is different from that of a
shareholder. Thus, it could be misleading to suggest that the regulator’s risk assessment could,
or should, be a substitute for independent analysis by investors.

c. The disclosure of entity-specific capital requirements imposed by a regulator might undermine

that regulator’s ability to impose such requirements. For example, the information could cause
depositors to withdraw funds, a prospect that might discourage regulators from imposing
requirements. Furthermore, an entity’s regulatory dialogue would become public, which might not
be appropriate in all circumstances.

d. Because different regulators have different tools available, for example formal requirements and
moral suasion, a requirement to disclose entity-specific capital requirements could not be framed
in a way that would lead to the provision of information that is comparable across entities.

e. Disclosure of capital requirements (and hence, regulatory judgements) could hamper clear
communication to the entity of the regulator’s assessment by creating incentives to use moral
suasion and other informal mechanisms.

f. Disclosure requirements should not focus on entity-specific capital requirements in isolation, but
should focus on how entity-specific capital requirements affect how an entity manages and
determines the adequacy of its capital resources.

g. A requirement to disclose entity-specific capital requirements imposed by a regulator is not part

of Pillar 3 of the Basel II Framework developed by the Basel Committee on Banking Supervision.

BC96 Taking into account all of the above arguments, the Board decided not to require quantitative
disclosure of externally imposed capital requirements. Rather, it decided to require disclosures about whether
the entity complied with any externally imposed capital requirements during the period and, if not, the
consequences of non-compliance. This retains confidentiality between regulators and the entity, but alerts
users to breaches of capital requirements and their consequences.

BC97 Some respondents to ED 7 did not agree that breaches of externally imposed capital requirements
should be disclosed. They argued that disclosure about breaches of externally imposed capital requirements
and the associated regulatory measures subsequently imposed could be disproportionately damaging to
entities. The Board was not persuaded by these arguments because it believes that such concerns indicate
that information about breaches of externally imposed capital requirements may often be material by its
nature. The Framework states that ‘Information is material if its omission or misstatement could influence the
economic decisions of users taken on the basis of the financial statements.’ Similarly, the Board decided not
to provide an exemption for temporary non-compliance with regulatory requirements during the year.
Information that an entity is sufficiently close to its limits to breach them, even on a temporary basis, is useful
for users.

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Internal capital targets

BC98 The Board proposed in ED 7 that the requirement to disclose information about breaches of capital
requirements should apply equally to breaches of internally imposed requirements, because it believed the
information is also useful to a user of the financial statements.
BC99 However, this proposal was criticised by respondents to ED 7 for the following reasons:

a. The information is subjective and, thus, not comparable between entities. In particular, different
entities will set internal targets for different reasons, so a breach of a requirement might signify
different things for different entities. In contrast, a breach of an external requirement has similar
implications for all entities required to comply with similar requirements.

b. Capital targets are not more important than other internally set financial targets, and to require
disclosure only of capital targets would provide users with incomplete, and perhaps misleading,
information.

c. Internal targets are estimates that are subject to change by the entity. It is not appropriate to
require the entity’s performance against this benchmark to be disclosed.

d. An internally set capital target can be manipulated by management. The disclosure requirement
could cause management to set the target so that it would always be achieved, providing little
useful information to users and potentially reducing the effectiveness of the entity’s capital
management.

BC100 As a result, the Board decided not to require disclosure of the capital targets set by management,
whether the entity has complied with those targets, or the consequences of any non-compliance. However,
the Board confirmed its view that when an entity has policies and processes for managing capital, qualitative
disclosures about these policies and processes are useful. The Board also concluded that these disclosures,
together with disclosure of the components of equity and their changes during the year (required by
paragraphs 106–110), would give sufficient information about entities that are not regulated or subject to
externally imposed capital requirements.

Puttable financial instruments and obligations arising on liquidation

BC100A The Board decided to require disclosure of information about puttable instruments and instruments
that impose on the entity an obligation to deliver to another party a pro rata share of the net assets of the
entity only on liquidation that are reclassified in accordance with paragraphs 16E and 16F of IAS 32. This is
because the Board concluded that this disclosure allows users of financial statements to understand the
effects of any reclassifications.
BC100B The Board also concluded that entities with puttable financial instruments classified as equity
should be required to disclose additional information to allow users to assess any effect on the entity’s
liquidity arising from the ability of the holder to put the instruments to the issuer. Financial instruments
classified as equity usually do not include any obligation for the entity to deliver a financial asset to another
party. Therefore, the Board concluded that additional disclosures are needed in these circumstances. In
particular, the Board concluded that entities should disclose the expected cash outflow on redemption or
repurchase of those financial instruments that are classified as equity and information about how that amount
was determined. That information allows liquidity risk associated with the put obligation and future cash flows
to be evaluated.

Presentation of measures per share

BC101 The exposure draft of 2006 did not propose to change the requirements of IAS 33 Earnings per
Share on the presentation of basic and diluted earnings per share. A majority of respondents agreed with this
decision. In their opinion, earnings per share should be the only measure per share permitted or required in
the statement of comprehensive income and changing those requirements was beyond the scope of this
stage of the financial statement presentation project.
BC102 However, some respondents would like to see alternative measures per share whenever earnings
per share is not viewed as the most relevant measure for financial analysts (ie credit rating agencies that
focus on other measures). A few respondents proposed that an entity should also display an amount per

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share for total comprehensive income, because this was considered a useful measure. The Board did not
support including alternative measures per share in the financial statements, until totals and subtotals, and
principles for aggregating and disaggregating items, are addressed and discussed as part of the next stage of
the financial statement presentation project.
BC103 Some respondents also interpreted the current provisions in IAS 33 as allowing de facto a display of
alternative measures in the income statement. In its deliberations, the Board was clear that paragraph 73 of
IAS 33 did not leave room for confusion. However, it decided that the wording in paragraph 73 could be
improved to clarify that alternative measures should be shown ‘only in the notes’. This will be done when IAS
33 is revisited or as part of the annual improvements process.
BC104 One respondent commented that the use of the word ‘earnings’ was inappropriate in the light of
changes proposed in the exposure draft and that the measure should be denominated ‘profit or loss per
share’, instead. The Board considered that this particular change in terminology was beyond the scope of IAS
1.

Transition and effective date

BC105 The Board is committed to maintaining a ‘stable platform’ of substantially unchanged standards for
annual reporting periods beginning between 1 January 2006 and 31 December 2008. In addition, some
preparers will need time to make the system changes necessary to comply with the revisions to IAS 1.
Therefore, the Board decided that the effective date of IAS 1 should be annual periods beginning on or after 1
January 2009, with earlier application permitted.

BC105A The exposure draft Presentation of Items of Other Comprehensive Income published in May 2010
proposed changes to presentation of items of OCI. The Board finalised these changes in June 2011 and
decided that the effective dates for these changes should be for annual reporting periods beginning on or
after 1 July 2012, with earlier application permitted. The Board did not think that a long transition period was
needed as the changes to presentation are small and the presentation required by the amendments is
already allowed under IAS 1.
BC105B The Board had consulted on the effective date and transition requirements for this amendment in
its Request for Views on Effective Dates and Transition Requirements in October 2010 and the responses to
that document did not give the Board any reason to reconsider the effective date and the transition
requirements.

Differences from SFAS 130

BC106 In developing IAS 1, the Board identified the following differences from SFAS 130:

a. Reporting and display of comprehensive income Paragraph 22 of SFAS 130 permits a choice
of displaying comprehensive income and its components, in one or two statements of financial
performance or in a statement of changes in equity. IAS 1 (as revised in 2007) does not permit
display in a statement of changes in equity.

b. Reporting other comprehensive income in the equity section of a statement of financial

position Paragraph 26 of SFAS 130 specifically states that the total of other comprehensive
income is reported separately from retained earnings and additional paid-in capital in a statement
of financial position at the end of the period. A descriptive title such as accumulated other
comprehensive income is used for that component of equity. An entity discloses accumulated
balances for each classification in that separate component of equity in a statement of financial
position, in a statement of changes in equity, or in notes to the financial statements. IAS 1 (as
revised in 2007) does not specifically require the display of a total of accumulated other
comprehensive income in the statement of financial position.

c. Display of the share of other comprehensive income items of associates and joint
ventures accounted for using the equity method Paragraph 82 of IAS 1 (as revised in 2007)
requires the display in the statement of comprehensive income of the investor’s share of the
investee’s other comprehensive income. Paragraph 122 of SFAS 130 does not specify how that
information should be displayed. An investor is permitted to combine its proportionate share of
other comprehensive income amounts with its own other comprehensive income items and
display the aggregate of those amounts in an income statement type format or in a statement of

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changes in equity.

Appendix Amendments to the Basis for Conclusions on other IFRSs

This appendix contains amendments to the Basis for Conclusions on other IFRSs that are necessary in order
to ensure consistency with the revised IAS 1. Amended paragraphs are shown with the new text underlined
and deleted text struck through.

*****

The amendments contained in this appendix when this Standard was revised in 2007 have been
incorporated into the relevant pronouncements published in this volume.

Dissenting opinions
Dissent of Mary E Barth, Anthony T Cope, Robert P Garnett and James J Leisenring from
IAS 1 (as revised in September 2007)
DO1 Professor Barth and Messrs Cope, Garnett and Leisenring voted against the issue of IAS 1
Presentation of Financial Statements in 2007. The reasons for their dissent are set out below.

DO2 Those Board members agree with the requirement to report all items of income and expense
separately from changes in net assets that arise from transactions with owners in their capacity as owners.
Making that distinction clearly is a significant improvement in financial reporting.
DO3 However, they believe that the decision to permit entities to divide the statement of comprehensive
income into two separate statements is both conceptually unsound and unwise.

DO4 As noted in paragraph BC51, the Framework28 does not define profit or loss, or net income. It also
does not indicate what criteria should be used to distinguish between those items of recognised income and
expense that should be included in profit or loss and those items that should not. In some cases, it is even
possible for identical transactions to be reported inside or outside profit or loss. Indeed, in that same
paragraph, the Board acknowledges these facts, and indicates that it had a preference for reporting all items
of income and expense in a single statement, believing that a single statement is the conceptually correct
approach. Those Board members believe that some items of income and expense that will potentially bypass
the statement of profit and loss can be as significant to the assessment of an entity’s performance as items
that will be included. Until a conceptual distinction can be developed to determine whether any items should
be reported in profit or loss or elsewhere, financial statements will lack neutrality and comparability unless all
items are reported in a single statement. In such a statement, profit or loss can be shown as a subtotal,
reflecting current conventions.
DO5 In the light of those considerations, it is puzzling that most respondents to the exposure draft that
proposed these amendments favoured permitting a two-statement approach, reasoning that it ‘distinguishes
between profit and loss and total comprehensive income’ (paragraph BC50). Distinguishing between those
items reported in profit or loss and those reported elsewhere is accomplished by the requirement for relevant
subtotals to be included in a statement of comprehensive income. Respondents also stated that a two-
statement approach gives primacy to the ‘income statement’; that conflicts with the Board’s requirement in
paragraph 11 of IAS 1 to give equal prominence to all financial statements within a set of financial
statements.
DO6 Those Board members also believe that the amendments are flawed by offering entities a choice of
presentation methods. The Board has expressed a desire to reduce alternatives in IFRSs. The Preface to
International Financial Reporting Standards, in paragraph 13,29 states: ‘the IASB intends not to permit
choices in accounting treatment … and will continue to reconsider … those transactions and events for which
IASs permit a choice of accounting treatment, with the objective of reducing the number of those choices.’
The Preface extends this objective to both accounting and reporting. The same paragraph states: ‘The
IASB’s objective is to require like transactions and events to be accounted for and reported in a like way and
unlike transactions and events to be accounted for and reported differently’ (emphasis added). By permitting
a choice in this instance, the IASB has abandoned that principle.
DO7 Finally, the four Board members believe that allowing a choice of presentation at this time will ingrain
practice, and make achievement of the conceptually correct presentation more difficult as the long-term
project on financial statement presentation proceeds.

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Dissenting opinion on amendments issued in June 2011

Dissent of Paul Pacter
DO1 Mr Pacter voted against issuing the amendments to IAS 1 Presentation of Financial Statements set out
in Presentation of Items of Other Comprehensive Income in June 2011. Mr Pacter believes that the Board
has missed a golden opportunity to align the performance statement with the Board’s Conceptual Framework
and, thereby, improve information for users of IFRS financial statements.
DO2 Mr Pacter believes that ideally this project should have provided guidance, to the Board and to those
who use IFRSs, on which items of income and expense (if any) should be presented as items of other
comprehensive income (OCI) and which of those (if any) should subsequently be recycled through profit or
loss. Mr Pacter acknowledges and accepts that this project has a more short-term goal – ‘to improve the
consistency and clarity of the presentation of items of OCI’. He believes that this project fails to deliver on that
objective, for the following reasons:

a. Consistency is not achieved because the standard allows choice between presenting
performance in a single performance statement or two performance statements. Users of
financial statements—and the Board itself—have often said that accounting options are not
helpful for understandability and comparability of financial statements.

b. Clarity is not achieved because allowing two performance statements is inconsistent with the
Conceptual Framework. The Conceptual Framework defines two types of items that measure an
entity’s performance—income and expenses. Mr Pacter believes that all items of income and
expense should be presented in a single performance statement with appropriate subtotals
(including profit or loss, if that can be defined) and supporting disclosures. This is consistent with
reporting all assets and liabilities in a single statement of financial position, rather than multiple
statements. Unfortunately, neither IAS 1 nor any other IFRS addresses criteria for which items
are presented in OCI. And the recent history of which items are presented in OCI suggests that
the decisions are based more on expediency than conceptual merit. In Mr Pacter’s judgement,
that is all the more reason to have all items of income and expense reported in a single
performance statement.

DO3 Mr Pacter believes that the Board should breathe new life into its former project on performance
reporting as a matter of urgency.

Guidance on implementing IAS 1 Presentation of Financial Statements

This guidance accompanies, but is not part of, IAS 1.

Illustrative financial statement structure

IG1 [Effective prior to 1 July 2012.] IAS 1 sets out the components of financial statements and minimum
requirements for disclosure in the statements of financial position, comprehensive income and changes in
equity. It also describes further items that may be presented either in the relevant financial statement or in the
notes. This guidance provides simple examples of ways in which the requirements of IAS 1 for the
presentation of the statements of financial position, comprehensive income and changes in equity might be
met. An entity should change the order of presentation, the titles of the statements and the descriptions used
for line items when necessary to suit its particular circumstances.
IG1 [Effective for annual reporting periods beginning on or after 1 July 2012. Refer to paragraph 139J for full
effective date information.] IAS 1 sets out the components of financial statements and minimum requirements
for disclosure in the statements of financial position, profit or loss and other comprehensive income and
changes in equity. It also describes further items that may be presented either in the relevant financial
statement or in the notes. This guidance provides simple examples of ways in which the requirements of IAS
1 for the presentation of the statements of financial position, profit or loss and other comprehensive income
and changes in equity might be met. An entity should change the order of presentation, the titles of the
statements and the descriptions used for line items when necessary to suit its particular circumstances.
IG2 [Effective prior to 1 January 2015.] The guidance is in three sections. Paragraphs IG3–IG6 provide
examples of the presentation of financial statements. Paragraphs IG7–IG9 provide an example of the
determination of reclassification adjustments for available-for-sale financial assets in accordance with IAS 39

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Financial Instruments: Recognition and Measurement. Paragraphs IG10 and IG11 provide examples of
capital disclosures.
IG2 [Effective for annual reporting periods beginning on or after 1 January 2015. Refer to paragraph 139G
added by IFRS 9(2010) for full effective date information.] The guidance is in two sections. Paragraphs IG3–
IG6 provide examples of the presentation of financial statements. Paragraphs IG7–IG9 have been deleted.
Paragraphs IG10 and IG11 provide examples of capital disclosures.
IG3 The illustrative statement of financial position shows one way in which an entity may present a
statement of financial position distinguishing between current and non-current items. Other formats may be
equally appropriate, provided the distinction is clear.
IG4 [Effective prior to 1 July 2012.] The illustrations use the term ‘comprehensive income’ to label the total
of all components of comprehensive income, including profit or loss. The illustrations use the term ‘other
comprehensive income’ to label income and expenses that are included in comprehensive income but
excluded from profit or loss. IAS 1 does not require an entity to use those terms in its financial statements.

IG4 [Effective for annual reporting periods beginning on or after 1 July 2012. Refer to paragraph 139J for full
effective date information.] The illustrations use the term ‘comprehensive income’ to label the total of all
components of profit or loss and other comprehensive income. The illustrations use the term ‘other
comprehensive income’ to label income and expenses that are included in comprehensive income but
excluded from profit or loss. IAS 1 does not require an entity to use those terms in its financial statements.
IG5 [Effective prior to 1 July 2012.] Two statements of comprehensive income are provided, to illustrate the
alternative presentations of income and expenses in a single statement or in two statements. The single
statement of comprehensive income illustrates the classification of income and expenses within profit or loss
by function. The separate statement (in this example, ‘the income statement’) illustrates the classification of
income and expenses within profit by nature.

IG5 [Effective for annual reporting periods beginning on or after 1 July 2012. Refer to paragraph 139J for full
effective date information.] Two statements of profit or loss and other comprehensive income are provided, to
illustrate the alternative presentations of income and expenses in a single statement or in two statements.
The statement of profit or loss and other comprehensive income illustrates the classification of income and
expenses within profit or loss by function. The separate statement (in this example, ‘the statement of profit or
loss’) illustrates the classification of income and expenses within profit by nature.
IG5A [Effective for annual reporting periods beginning on or after 1 July 2012. Refer to paragraph 139J for
full effective date information.] Two sets of examples of statements of profit or loss and other comprehensive
income are shown. One shows the presentation while IAS 39 Financial Instruments: Recognition and
Measurement remains effective and is applied; the other shows presentation when IFRS 9 Financial
Instruments is applied.

IG6 The examples are not intended to illustrate all aspects of IFRSs, nor do they constitute a complete set
of financial statements, which would also include a statement of cash flows, a summary of significant
accounting policies and other explanatory information.

Part I: Illustrative presentation of financial statements

[Effective prior to 1 January 2015.]

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[Effective for annual reporting periods beginning or or after 1 January 2015. Refer to paragraph 139G added
by IFRS 9(2010) for full effective date information.

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[Effective prior to 1 January 2015.]

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[Effective for annual reporting periods beginning on or after 1 January 2015. Refer to paragraph 139G added
by IFRS 9(2010) for full effective date information.

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[Effective prior to 1 January 2015.]

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[Effective for annual reporting periods beginning on or after 1 January 2015. Refer to paragraph 139G added
by IFRS 9(2010) for full effective date information.]

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[Effective prior to 1 January 2015.]

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[Effective for annual reporting periods beginning on or after 1 January 2015. Refer to paragraph 139G added
by IFRS 9(2010) for full effective date information.]

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[Effective prior to 1 January 2015.]

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[Effective for annual reporting periods beginning on or after 1 January 2015. Refer to paragraph 139G added
by IFRS 9(2010) for full effective date information.]

[Effective prior to 1 January 2015.

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[Effective for annual reporting periods beginning on or after 1 January 2015. Refer to paragraph 139G added
by IFRS 9(2010) for full effective date information.]

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Part II: Illustrative example of the determination of reclassification adjustments

IG7 [Effective prior to 1 January 2015.] The Standard requires an entity to disclose reclassification
adjustments relating to each component of other comprehensive income.
IG7 [Effective for annual reporting periods beginning on or after 1 January 2015. Refer to paragraph 139G
added by IFRS 9(2010) for full effective date information.] [Deleted]
IG8 [Effective prior to 1 January 2015.] This guidance provides an illustration of the calculation of
reclassification adjustments for available-for-sale financial assets recognised in accordance with IAS 39.
IG8 [Effective for annual reporting periods beginning on or after 1 January 2015. Refer to paragraph 139G
added by IFRS 9(2010) for full effective date information.] [Deleted]
IG9 [Effective prior to 1 January 2015.] On 31 December 20X5, XYZ Group purchased 1,000 shares (equity
instruments) at 10 currency units (CU) per share, classified as available for sale. The fair value of the
instruments at 31 December 20X6 was CU12; at 31 December 20X7 the fair value had increased to CU15.
All of the instruments were sold on 31 December 20X7; no dividends were declared on those instruments
during the time that they were held by XYZ Group. The applicable tax rate in accordance with IAS 12 Income
Taxes is 30 per cent.

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IG9 [Effective for annual reporting periods beginning on or after 1 January 2015. Refer to paragraph 139G
added by IFRS 9(2010) for full effective date information.] [Deleted]

Part III: Illustrative examples of capital disclosures (paragraphs 134–136) An entity that is
not a regulated financial institution
IG10 The following example illustrates the application of paragraphs 134 and 135 for an entity that is not a
financial institution and is not subject to an externally imposed capital requirement. In this example, the entity
monitors capital using a debt-to-adjusted capital ratio. Other entities may use different methods to monitor
capital. The example is also relatively simple. An entity decides, in the light of its circumstances, how much
detail it provides to satisfy the requirements of paragraphs 134 and 135.

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An entity that has not complied with externally imposed capital requirements
IG11 The following example illustrates the application of paragraph 135(e) when an entity has not complied
with externally imposed capital requirements during the period. Other disclosures would be provided to
comply with the other requirements of paragraphs 134 and 135.

Facts

Entity A provides financial services to its customers and is subject to capital requirements
imposed by Regulator B. During the year ended 31 December 20X7, Entity A did not comply
with the capital requirements imposed by Regulator B. In its financial statements for the year
ended 31 December 20X7, Entity A provides the following disclosure relating to its non-
compliance.

Example disclosure

Entity A filed its quarterly regulatory capital return for 30 September 20X7 on 20 October 20X7.
At that date, Entity A’s regulatory capital was below the capital requirement imposed by
Regulator B by CU1 million. As a result, Entity A was required to submit a plan to the regulator
indicating how it would increase its regulatory capital to the amount required. Entity A submitted
a plan that entailed selling part of its unquoted equities portfolio with a carrying amount of
CU11.5 million in the fourth quarter of 20X7. In the fourth quarter of 20X7, Entity A sold its fixed
interest investment portfolio for CU12.6 million and met its regulatory capital requirement.

Appendix Amendments to guidance on other IFRSs

The following amendments to guidance on other IFRSs are necessary in order to ensure consistency with
the revised IAS 1. In the amended paragraphs, new text is underlined and deleted text is struck through.

*****

The amendments contained in this appendix when IAS 1 was revised in 2007 have been incorporated into
the guidance on the relevant IFRSs, published in this volume.
________________________________________________
1 effective date 1 January 2009
2 effective date 1 January 2009
3 effective date 1 January 2009
4 effective date 1 January 2010 (earlier application permitted)
5 effective date 1 January 2015 (earlier application permitted)
6 effective date 1 January 2011
7 effective date 1 January 2015 (earlier application permitted)
8 effective date 1 January 2013 (earlier application permitted)
9 effective date 1 January 2013 (earlier application permitted)
10 effective date 1 January 2013 (earlier application permitted)
11 effective date 1 January 2009
12 effective date 1 July 2009
13 effective date 1 July 2010 (earlier application permitted)
14 Definition of IFRSs amended after the name changes introduced by the revised Constitution of the IFRS Foundation in
2010.
15 [Effective for annual reporting periods beginning on or after 1 July 2012. Refer to paragraph 139J for full effective date
information.] Statement of profit or loss and other comprehensive income
16 [Effective for annual reporting periods beginning on or after 1 July 2012. Refer to paragraph 139J for full effective date
information.] Information to be presented in the profit or loss section or the statement of profit or loss
17 [Effective for annual reporting periods beginning on or after 1 July 2012. Refer to paragraph 139J for full effective date
information.] Information to be presented in the statement(s) of profit or loss and other comprehensive income or in the notes
18 IASC did not publish a Basis for Conclusions.
19 In January 2008 the IASB issued an amended IAS 27 Consolidated and Separate Financial Statements, which amended
‘minority interest’ to ‘non-controlling interests’. The consolidation requirements in IAS 27 were superseded by IFRS 10
Consolidated Financial Statements issued in May 2011. The term ‘non-controlling interests’ and the requirements for non-
controlling interests were not changed.
20 In 2006 the IASB issued IFRS 8 Operating Segments. As explained in paragraphs BC46 and BC47 of the Basis for
Conclusions on IFRS 8, that IFRS includes an exemption from some requirements if the necessary information is not
available and the cost to develop it would be excessive.

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21 In November 2009 and October 2010 the IASB amended some of the requirements of IAS 39 and relocated them to
IFRS 9 Financial Instruments. IFRS 9 applies to all items within the scope of IAS 39. This paragraph refers to matters
relevant when IAS 1 was issued.
22 In November 2009 and October 2010 the IASB amended some of the requirements of IAS 39 and relocated them to
IFRS 9 Financial Instruments. IFRS 9 applies to all items within the scope of IAS 39. This paragraph refers to matters
relevant when IAS 1 was issued.
23 IFRS 9 Financial Instruments, issued in November 2009 and amended in October 2010, eliminated the category of
available-for-sale financial assets. This paragraph refers to matters relevant when IAS 1 was issued.
24 In January 2008 the IASB issued an amended IAS 27 Consolidated and Separate Financial Statements, which amended
‘minority interest’ to ‘non-controlling interests’. The consolidation requirements in IAS 27 were superseded by IFRS 10
Consolidated Financial Statements issued in May 2011. The term ‘non-controlling interests’ and the requirements for non-
controlling interests were not changed.
25 IFRS 9 Financial Instruments, issued in November 2009 and amended in October 2010, eliminated the category of
available-for-sale financial assets. This paragraph refers to matters relevant when IAS 1 was issued.
26 IFRS 9 Financial Instruments, issued in November 2009 and amended in October 2010, eliminated the category of held-
to-maturity financial assets. This paragraph refers to matters relevant when IAS 1 was issued.
27 IFRS 13 Fair Value Measurement, issued in May 2011, defines fair value and contains the requirements for measuring
fair value.
28 The reference to the Framework is to IASC’s Framework for the Preparation and Presentation of Financial Statements,
adopted by the IASB in 2001. In September 2010 the IASB replaced the Framework with the Conceptual Framework for
Financial Reporting.
29 Paragraph 13, slightly amended, is now paragraph 12 of the Preface, as amended at September 2010.

Confidential and Proprietary - for Use Solely by Authorised Personnel

This accounting manual provides comprehensive guidance; however, the manual does not address all possible fact
patterns and the guidance is subject to change. Consult a Deloitte Touche Tohmatsu professional regarding your specific
issues and questions.
Copyright © 2012 Deloitte Touche Tohmatsu. All rights reserved.

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