Intermediate Accounting 3

Chapter 1

Statement of Financial Position

    • General purpose financial statements are those statements that cater to the common needs of a wide range of primary (external) users.
    • The purpose of general purpose 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.
    • A complete set of financial statements consists of the following:  (1) statement of financial position, (2) statement of profit or loss and other comprehensive income, (3) statement of changes in equity, (4) statement of cash flows, (5) notes, (5a) comparative information, and (6) additional statement of financial position when an entity makes a retrospective application, retrospective restatement, or reclassifies items – with material effect.
    • The statement of financial position may be presented either showing current/non-current distinction (classified) or based on liquidity (unclassified). PAS 1 encourages the classified presentation.
    • Current assets are those that are expected to be realized within 1 year. All other assets are noncurrent.
    • Current liabilities are those that are expected to be settled within 1 year. All other liabilities are noncurrent.
    • Deferred tax assets and deferred tax liabilities are presented as noncurrent items in a classified statement of financial position.
    • PAS 1 does not prescribe the order or format in which an entity presents items.