{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

CAPITULO 5 INTERMEDIA - Chapter 5 Statement of Financial...

Info icon This preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
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 · 5–1 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 company’s 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 company’s 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. 3. Liabilities that differ in their amounts, nature, and timing . For example, Royal Ahold (NLD) should report accounts payable separately from its pension liability.
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern