PAS 1: PRESENTATION OF FINANCIAL

STATEMENTS
Conceptual Framework & Accounting Standards
BS Accountancy 1 | PROF. EJ RAGASA | 1ST SEM A.Y. 2024-2025

PAS 1  Based on PFRS and PAS

 Those intended to meet the
 The basis for the presentation of needs of users who aren’t in a
the Financial Statement. position to require an entity to
 The guidelines are for their prepare reports tailored to their
structure and the minimum particular information needs
requirements for content to  The subject matter of
ensure comparability. Conceptual Framework and
Types of Comparability PFRS
 Intra-comparability
o Comparing amounts from the The Primary Purpose of
same entity but with different Financial Statements
periods
o Also known as Horizontal or  To provide information about
Inter-period. the financial position (balance
 Inter-comparability sheet), financial performance
o Two or more companies are (income statement), and
compared in the same cashflows of an entity that is
period. useful to a wide range of users
in making economic decisions

Comparability requires consistency

in the adoption and application of The Secondary Purpose of
accounting policies and in Financial Statements
depreciation and in presentation of  Shows the results of
the financial statement. management for entity resource

Financial Statements Complete Set of Financial

 End products of the financial Statement
reporting process  Statement of Financial Position
 Information gathered and  Statement of Comprehensive
processed is periodically Income (Income statement +
communicated OCI)
 Structured presentation of an  Statement of Changes in
entity's financial position Owners’ Equity (A HELL HOLE)
General Purpose Financial  Statement of Cash Flows
Statement  Notes with Comparative
Statement
 Concerned for common users
PAS 1: PRESENTATION OF FINANCIAL STATEMENTS

 Additional Statement of
Financial Position (Required
ONLY when certain instances
occur) (3rd Balance Sheet)
PAS 1: PRESENTATION OF FINANCIAL STATEMENTS

General Features of Financial limited to 12 months from

Statement the reporting date.
 Accrual Basis of Accounting
 Fair presentation and o Opposite of the Cash Basis.
compliance with PFRS
o All financial statements shall
o Faithfully representing, in the
be prepared using an accrual
FS, the effects of transactions
basis of accounting except
and other events by the
for the statement of cash
definitions and recognition
flows, which is prepared
criteria
using the cash basis
o Note: Fair Presentation also
o This is what we usually follow
requires the proper selection
when making the General
and application of accounting
Purpose FS
policies, proper presentation
o Cash Basis is when revenue
of information, and provision
is recorded when cash is
of additional disclosure
received.
o Compliance with PFRS–
 Materiality and Aggregation
presumed to result in fairly
o Similar accounts
presented financial
o Each material class of similar
statements. (As an
accounting student, the PFRS items (or line item) is
is your bible) presented separately.
o Note: PAS 1 requires an entity o Dissimilar items are
whose FS complies with presented separately unless
PFRSs to make explicit and they are immaterial
unreserved statements of o Individually immaterial items
such compliance in the notes. are aggregated with other
o There might be cases where items
an entity’s management  Offsetting
concludes that compliance o Assets, liabilities, income, or
with a PFRS requirement is expenses are presented
misleading separately and are not offset
 In such cases, PAS 1 unless offsetting is required
permits a departure from or permitted by a PFRS.
PFRS requirement if the o For example:
relevant regulatory  Presenting gains or losses
framework requires of from sales of assets net of
allows such departure. the related selling
 Going Concern expenses.
o Management shall assess the  Sold PPE at 500k, the
entity’s ability to continue as commission is 5k,
a going concern. freight is 10k, so it
o Considering all available becomes 500k -5k -10k
information about the future, = 485k, so the record is
which is at least but not
PAS 1: PRESENTATION OF FINANCIAL STATEMENTS

485k. Debit the PPE,

the gain is 85k.
Structure and Content of
 Presenting at net amount
Financial Statement
until the unrealized gains
and losses arising from  The header contains the
trading securities (higher following:
accounting, more o Name of the reporting entity
complicated) o Whenever the statements are
 Presenting a loss from a for the individual entity or
provision net of group of entities
reimbursement from a o Date at the end of the
third-party. reporting period or the period
 Frequency of Reporting covered by the FS
o At least annually  Starts with “as of” “for
o If an entity changes its the period ended”
reporting period to a longer o Presentation currency and
or shorter than 1 year, it shall level of rounding used.
disclose the following: o Example:
 The period covered by FS ABC Group
 Reason for using longer or Statement of Financial
shorter period Position
 The fact that the amounts As of December 31, 20XX
presented in the FS are (In thousands of Philippine
not entirely comparable Peso)
 Cannot compare longer
periods to shorter periods
 Comparative Information
Management’s Responsibility
o As a minimum, an entity
over the Financial Statement
presents two of each
statement and related notes.  The one who has ultimate
o PAS 1 permits entities to responsibility over financial
provide comparative statement is the management
information in addition to the o Accountants only prepare and
minimum. make the financial statement
 Consistency of the Presentation  Preparation and fair
o Presentation and presentation of financial
classification of items in the statement following PFRSs
FS are retained from one  Internal control over financial
period to the next unless a reporting
change in presentation is o To make sure the objectives
either: are being met
 Required by PFRS  Going concern assessment
 Results in information o If the company will still exist
that is reliable and more in the following years
relevant
 PAS 1: PRESENTATION OF FINANCIAL STATEMENTS

 Overnight over the financial payable notes/loans/bon

reporting process  Salaries ds payable due
 Review and approval of financial payable beyond 1 year
statement  Dividends  Deferred tax
payable liabilities
 Income tax
Statement of Financial Position payable
(Balance Sheet)  Unearned
 Shows the entity’s financial revenue
condition as of a certain date  Portions of
 Can be presented either notes/loans/bon
o Classified ds payable
 Current assets and non- within 12
current assets/liabilities months
o Unclassified
 Based on liquidity
 Nearness to cash
 PAS 1 does not prescribe the
order or format of presenting  PAS 1 does not prescribe the
items in the statement of order or format of presenting
financial position items
o Doesn’t care if classified or
unclassified Current Assets Current
 Expected to Liabilities
Current Noncurrent be realized,  Expected to
Assets Assets sold, or be settled in
 Cash and cash  PPE consumed in the identity’s
equivalents  Nontrade the entity’s normal
 Accounts receivable normal operating
receivable/trade collectible operating cycle
receivable beyond 1 year cycle  Held
 Nontrade  Investment in  Held primarily primarily for
receivable associate for trading trading
collectible  Investment  Expected to  Due to be
within 12 property be realized settled within
months  Intangible within 12 months after
 Held for trading assets months after the reporting
securities  Deferred tax reporting period
period  The entity
 Inventory assets
 Cash/cash does not
 Prepaid assets
equivalent have the
unless unconditional
Liabilities Liabilities restricted from right to defer
 Accounts  Portions of being settlement of
 PAS 1: PRESENTATION OF FINANCIAL STATEMENTS

exchanged the liability changes in equity

for at least 12 Change in  Direct
months after Accounting adjustment to
reporting
Policy the beginning
period
balance of
Retained
Earnings
 Refinancing Agreement Other  Changes are
o A long-term obligation that is
Comprehensiv shown in the OCI
maturing within 12 months
after the reporting period is e Income section
classified as current even if a  Cumulative
refinancing agreement to balances are
reschedule payments on a shown in the
long-term basis is completed Statement of
after the reporting period but Financial Position
before the FS are authorized
Transaction  Recognized in
to issue
o However, the obligation is with Owners Equity directly
classified as noncurrent if the
entity expects and has the  Presentation of Expense
discretion to refinance it on a o Nature of Expense Method
long-term basis under an
 Depreciation, Transport
existing loan basis.
costs, Employee benefits,
Advertising costs
o Function of Expense Method
Statement of Comprehensive  Cost of goods sold,
Income Distribution costs,
 Combination of income Administrative expenses,
statement and OCI Selling expenses
 Shows the profit or loss
o Income – Expenses
Other Comprehensive Income
Transactions Accounting
Correction of  Direct  Changes in revaluation surplus
Prior Period adjustment to  Remeasurement of pension
plan
Error the beginning
 Gains and losses in investments
balance of measured at FVOCI
Retained  Effective portion of hedging
Earnings. instruments
 Shown in the  Gains or losses arising from
statement of translating the FS of foreign
operations
PAS 1: PRESENTATION OF FINANCIAL STATEMENTS

4. Disaggregation of the line

items in the other financial
Presentation of Other statements and other
Comprehensive Income supporting information
 It is grouped into the following: a. Example: PPE  Land,
o Reclassification adjustment is building, vehicle, etc.
allowed 5. Other disclosures required by
o Reclassification is not allowed PFRS  minimum disclosure

Income and Expenses

 Can be presented in either:
o Single statement
o Two statements

Statement of Changes in Equity

 Beginning balance
 Movement
 Ending balance
 Shows the following:
o Effects of change in
accounting policy
o Effects of correction of prior
period error
o Total comprehensive income
for the period
o Transactions with the owners

Notes
 Provides information in addition
to those presented in the other
financial statements
1. General information on the
reporting entity
2. Statement of compliance with
the PFRS and basis of
preparation of financial
statement
3. Summary of Significant
Accounting Policies