Week 3 Report Financial Position Luminus.pdf - Week 3...

Week 3
Reporting Financial Position
ACC 2707 Semester 1 AY2021/2022
by Annette Foo
1

❑ Statement of Financial Position
➢ identify usefulness and limitations
➢ classification and preparation for reporting
❑ Basic Financial Statement Analysis
➢ explain financial statement analysis
➢ perform ratio analysis
Learning Objectives
2

References
❑ Chapters 5, 24
Intermediate Accounting – IFRS Edition (4
th
Ed)
❑ SFRS(I) 1-1
Presentation of Financial Statements
3

Statement of financial position , also referred to as the
balance sheet :
1. Reports assets, liabilities, and equity at a specific
date.
2. Provides information about resources, obligations to
creditors, and equity in net resources.
3. Helps in predicting amounts, timing, and uncertainty
of future cash flows.
Statement of Financial Position
4

◆
Computing rates of return.
◆
Evaluating the capital structure.
◆
Assess risk and future cash flows.
◆
Assess the company’s:
►
Liquidity,
►
Solvency, and
►
Financial flexibility.
Usefulness
5
Statement of Financial Position

◆
Most assets and liabilities are reported at
historical cost.
◆
Use of judgments and estimates.
◆
Many items of financial value
are omitted.
Limitations
6
Statement of Financial Position

7
SFRS(I) 1-1 Presentation of Financial Statements
The Statement of Financial Position shall include line items:
Statement of Financial Position
a) property, plant and equipment;
b) investment property;
c) intangible assets;
d) financial assets
e) investments accounted for using the equity method;
f) biological assets
g) inventories;
h) trade and other receivables;
i) cash and cash equivalents;
j) total assets classified as held for sale

8
SFRS(I) 1-1 Presentation of Financial Statements
The Statement of Financial Position shall include line items:
Statement of Financial Position
k) trade and other payables;
l) provisions;
m) financial liabilities;
n) liabilities and assets for current tax;
o) deferred tax liabilities and deferred tax assets;
p) liabilities included in disposal groups classified as
held for sale;
q) non-controlling interests, presented within equity;
and
r) issued capital and reserves attributable to owners of
the parent.

▪
Offsetting
➢
An entity shall not offset assets and liabilities,
unless required or permitted by a SFRS(I).
➢
Measuring assets net of valuation allowances — for
example, obsolescence allowances on inventories
and doubtful debts allowances on receivables — is
not offsetting.
▪
Different Measurement Bases for different classes of
assets suggests that their nature or function differs
➢
an entity presents them as separate line items
➢
example: different classes of property, plant and
equipment can be carried at cost or at revalued
amounts
9
SFRS(I) 1-1 Presentation of Financial Statements
Statement of Financial Position

Statement of Financial Position
Classified Report-Form Statement of Financial Position
10

ASSET
▪
A present economic resource controlled by the
entity as a result of past events
▪
An economic resource is a right that has the
potential to produce economic benefits.