📖 Overview
This standard sets out the basis for presenting general purpose financial statements, including the components of a complete set of financial statements (statement of financial position, statement of profit or loss, statement of comprehensive income, statement of changes in equity, statement of cash flows, and notes). It also sets out general principles for presentation and minimum disclosure requirements.
🎯 Scope
This standard applies to all general purpose financial statements prepared and presented in accordance with International Financial Reporting Standards. This includes individual and consolidated financial statements of commercial, industrial, service, and financial entities.
⚙️ Key Principles
1. **Going Concern**: Financial statements assume the entity will continue operating for the foreseeable future.
2. **Accrual Basis**: Transactions and events are recorded when they occur, not when cash is received or paid.
3. **Materiality**: Items should be presented separately if omission or misstatement could influence user decisions.
4. **Comparability**: Comparative information for the previous period must be presented.
5. **Consistent Presentation**: The presentation and classification of items should remain consistent from period to period unless a change is justified.
📏 Measurement
Elements in financial statements are measured using different measurement bases depending on the item type:
- **Historical Cost**: For property, plant and equipment, and inventory.
- **Fair Value**: For certain financial assets and investments.
- **Net Realizable Value**: For inventory.
- **Present Value**: For long-term liabilities.
✅ Recognition
An item is recognized in financial statements when:
1. It is probable that future economic benefits associated with the item will flow to or from the entity.
2. The cost or value of the item can be measured reliably.
Revenue is recognized when performance obligations are satisfied, and expenses are recognized when a decrease in economic benefits occurs.
📊 Presentation
A complete set of financial statements consists of five main statements:
1. **Statement of Financial Position (Balance Sheet)**: Shows assets, liabilities, and equity.
2. **Income Statement**: Shows revenues, expenses, and net profit.
3. **Statement of Comprehensive Income**: Shows Other Comprehensive Income (OCI).
4. **Statement of Changes in Equity**: Shows changes in equity.
5. **Statement of Cash Flows**: Shows cash flows from operating, investing, and financing activities.
6. **Notes**: Explain accounting policies and additional details.
📝 Disclosure Requirements
The notes must disclose:
- Accounting policies used (asset measurement methods, depreciation methods, inventory valuation).
- Key assumptions and estimates.
- Comparative information for the previous period.
- Any material events after the reporting period.
- Related party relationships.
- Contingent liabilities and assets.
🔗 Related Standards
IAS 7 (Statement of Cash Flows), IAS 8 (Accounting Policies), IFRS 15 (Revenue)