Understanding Statement of financial position

[Yakub02]

Statement of financial position-

Current and non-current assets and liabilities

IAS 1 requires an entity to present current and non-current assets, and current and non-current liabilities, as separate classifications on the face of its statement of financial position unless a liquidity presentation provides more relevant and reliable information. In such cases, all assets and liabilities must be presented broadly in order of liquidity.

Some items may be presented using a current/non-current distinction and others in order of liquidity if this provides information that is more relevant and reliable. Whichever method of presentation is adopted an entity must disclose the amount expected to be recovered or settled after more than twelve months for each asset and liability line item that combines current and non-current amounts

Information to be presented on the face of the statement of financial position

IAS 1 provides a list of items that, as a minimum, must be shown on the face of the statement of financial position as a ‘line item’ (in other words, on a separate line in the statement):

Additional line items should be included in the statement of financial position when presenting them separately and is ‘relevant to an understanding of the entity’s financial position.

Some of the line items in the statement of financial position should be sub classified into different categories, giving details of how the total figure is made up. This sub-classification may be presented either: as additional lines on the face of the statement of financial position (adding up to the total amount for the item as a whole); or in notes to the financial statements.

 

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Statement of profit or loss and other comprehensive income.

A single statement or two statements

The statement provides information about the performance of an entity in a period. It consists of two parts:  a statement of profit or loss – a list of income and expenses which result in a profit or loss for the period; and a statement of other comprehensive income –

a list of other gains and losses that have arisen in the period. IAS 1 allows an entity to present the two sections in a single statement or in two separate statements.

IAS 1 provides a list of items that, as a minimum, must be shown on the face of the statement of profit or loss and other comprehensive income. Additional line items should be presented on the face of the statement of comprehensive income when it is relevant to an understanding of the entity’s

 

[Yakub02]

Information to be shown on the face of the statement of comprehensive income (or the statement of profit or loss, if separate) or in the notes

The following information may be shown either on the face of the statement of comprehensive income or in a note to the financial statements: material items of income and expense an analysis of expenses, providing either:

expenses analyzed by their nature, or expenses analyzed by the function that has incurred them

Information to be presented in the other comprehensive income section

The other comprehensive income section must 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: will not be reclassified subsequently to profit or loss: revaluation surpluses on property,

plant and equipment (IAS 16); revaluation surpluses on intangible assets (IAS 38); re measurements of defined benefit pension schemes .

 

[Yakub02]

Statement of changes in equity (SOCIE)

A SOCIE shows the amount at the beginning of the period, changes during the period, and the amount at the end of the period for each component of equity.

For each component of equity, the SOCIE should show changes resulting from:
profit (gain) or loss for the period; each item of other comprehensive income; transactions with owners in their capacity as owners. new issues of shares; payments of dividends; repurchases and cancellation of its own shares by the company; and charges in respect of equity-settled share based payment transactions. Transactions with owners in their capacity as owners are not gains or losses .

 

[Yakub02]

Notes to the financial statements;

Notes contain information in addition to that presented in the statement of financial position, statement of comprehensive income,


statement of changes in equity and statement of cash flows. Notes provide narrative descriptions of items in those statements and information about items that do not qualify for recognition in those statements.

They also explain how totals in those statements are formed.

Disclosure of accounting policies An entity must disclose the following in the summary of significant accounting policies: the measurement basis (or bases) used in preparing the financial statements; and the other accounting policies used that are relevant to an understanding of the financial statements.

 

[Yakub02]

Management must disclose those policies that would assist users in understanding how transactions,

other events and conditions are reflected in the reported financial performance and financial position. If an IFRS allows a choice of policy, disclosure of the policy selected is especially useful.

Some standards specifically require disclosure of particular accounting policies. For example, IAS 16 requires disclosure of the measurement bases used for classes of property, plant and equipment. It is also appropriate to disclose an accounting policy not specifically required by IFRSs, but selected and applied in accordance with IAS 18

An entity must disclose information regarding key assumptions about the future, and other key sources of measurement uncertainty, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

 

[Ebram kamal]

Differentiating between current and non-current assets and liabilities is crucial, as it helps users to understand the liquidity and financial health of the business. Current assets and liabilities are those that are expected to be realized or settled within the next 12 months, while non-current assets and liabilities are those that will not be realized or settled within the next 12 months.

Presenting these items separately on the face of the statement of financial position provides clarity and transparency to users. However, if a liquidity presentation provides more relevant and reliable information, it may be appropriate to present assets and liabilities in order of liquidity instead.

In addition to presenting these items on the face of the statement of financial position, IAS 1 requires disclosure of the amount expected to be recovered or settled after more than twelve months for each asset and liability line item that combines current and non-current amounts. This disclosure provides further transparency and helps users to understand the long-term financial position of the business.

 

[Knowlopedia]

As a business owner, I know how difficult it can be to face the prospect of bankruptcy. It can feel like the end of your dreams and all your hard work has been for nothing.

When faced with financial difficulties, many businesses turn to filing for bankruptcy as a way out. This process allows them to restructure their debt and get back on track financially. While this may seem like an extreme measure, it can actually be beneficial in some cases if done correctly.

The first step in dealing with bankruptcy is understanding what it means for your business and its future prospects. Bankruptcy does not mean that you have failed or that you are doomed; rather, it's an opportunity to start fresh and make changes that will help ensure success going forward. You should also take time to review any contracts or agreements you have made with creditors so that you understand exactly what will happen during the process of restructuring debt through bankruptcy court proceedings.

Once you understand what filing for bankruptcy entails, there are several steps you can take to ensure a successful outcome: create a plan for repaying debts; negotiate with creditors; seek professional advice from an attorney or accountant; research potential tax implications; and develop strategies for improving cash flow management going forward. Taking these steps will help put your business on solid footing once again after emerging from bankruptcy proceedings successfully.

It's important to remember that while filing for bankruptcy may seem daunting at first, it doesn't have to spell disaster if handled properly by experienced professionals who understand the legalities involved in such matters as well as how best to manage finances post-bankruptcy proceedings so as not avoid similar situations in future years down the line . With careful planning and guidance from experts who specialize in this area , businesses often find themselves better off than before they filed due largely because they now possess greater knowledge about managing their finances more effectively .

Bankruptcy is certainly no easy road but when approached strategically , there’s no reason why businesses cannot emerge stronger than ever before . With proper guidance , support , and dedication , companies can come out on top despite having gone through such trying times .

 

[Yusra3]

The statement of financial position is a document that summarizes a company's financial performance and condition. It provides information about the resources, liabilities, and owners' equity of the business.

The statement of financial position is prepared by the company's management to help it assess its present operations, identify problems, and plan for future growth or decline. The statement includes information about assets, liabilities, and owners' equity.

The balance sheet shows how much money the company has in its checking account at any given time. It also shows what loans the company has made out to others as well as how much cash it has on hand. The income statement shows revenues from sales of products or services during a certain period of time (usually one year). It also includes expenses incurred during this same period of time such as salaries paid out for employees working at different locations throughout North America (or wherever else) at any given time).