CAPITULO 5 INTERMEDIA

CAPITULO 5 INTERMEDIA - C H A P T E R 5 STATEMENT OF...

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Unformatted text preview: C H A P T E R 5 STATEMENT OF FINANCIAL POSITION AND STATEMENT OF CASH FLOWS This IFRS Supplement provides expanded discussions of accounting guidance under International Financial Reporting Standards (IFRS) for the topics in Intermediate Accounting. The discussions are organized according to the chapters in Intermediate Accounting (13 th or 14 th Editions) and therefore can be used to supplement the U.S. GAAP requirements as presented in the textbook. Assignment material is provided for each supplement chapter, which can be used to assess and reinforce student understanding of IFRS. 1 A company may classify the statement of financial position in some other manner, but in practice you see little departure from these major subdivisions. In some countries, such as Germany, companies often list current assets first. IAS No. 1 requires companies to distinguish current assets and liabilities from non-current ones, except in limited situations. [1] Chapter 5 Statement of Financial Position and Statement of Cash Flows 51 SECTION 1 STATEMENT OF FINANCIAL POSITION CLASSIFICATION IN THE STATEMENT OF FINANCIAL POSITION Statement of financial position accounts are classified . That is, a statement of financial position groups together similar items to arrive at significant subtotals. Furthermore, the material is arranged so that important relationships are shown. The IASB indicates that the parts and subsections of financial statements are more informative than the whole. Therefore, the IASB discourages the reporting of summary accounts alone (total assets, net assets, total liabilities, etc.). Instead, companies should report and classify individual items in sufficient detail to permit users to assess the amounts, timing, and uncertainty of future cash flows. Such classification also makes it easier for users to evaluate the companys liquidity and financial flexibility, profitabil- ity, and risk. To classify items in financial statements, companies group those items with similar characteristics and separate items with different characteristics. For example, companies should report separately: 1. Assets and liabilities with different general liquidity characteristics . For example, Nokia (FIN) reports cash separately from inventories. 2. Assets that differ in their expected function in the companys central operations or other activities. For example, IBM (USA) reports merchandise inventories sep- arately from property, plant, and equipment. Similarly, a company like Marks and Spencer plc (GBR) that uses assets in its operations should report these assets differently from assets held for investments and assets subject to restrictions, such as leased facilities....
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CAPITULO 5 INTERMEDIA - C H A P T E R 5 STATEMENT OF...

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