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Application of IAS 1 Presentation of Financial Statements IAS 1 Presentación de Estados Financieros 1

Application of IAS 1 Presentation of Financial Statements

Alcance

IAS 1 (2007) applies from 2009 (for entities with calendar year) with early application allowed.

Applies to general purpose FS based on IFRS.

IFRS requirements apply to individual and consolidated EF.

<IAS 1.1 y 2>

IFRS does not prohibit the presentation of consolidated EF under IFRS and EF of the parent under local regulations in the same document, when the basis of preparation is clearly disclosed in accounting policies.

<iGAAP 2014 A4, 2.2.2>

Components of FS

A complete set of FS under IFRS must include:

Statement of financial position.

Income statement and other comprehensive

income.

- It can occur in only one state or in two.

Statement of changes in equity.

Statement of cash flows.

Notes to the financial statements.

Comparative information.

Initial statement of financial position for the first period presented.

- When a change is applied retrospectively accounting, error correction or reclassification.

<IAS 1.10>

Some entities present other information outside the FS, such as:

MD&A

Other states or certificates.

Such information is outside the scope of IFRS.

<IAS 1.13 y 14>

General considerations

General considerations General considerations when preparing FS: • Reasonable presentation and compliance with IFRS.

General considerations when preparing FS:

Reasonable presentation and compliance with IFRS.

Business in progress.

Accounting accrual

.

Materiality and grouping.

Compensation.

Frequency of preparation.

Comparative information.

Presentation consistency

<IAS 1.15 a 46>

General considerations

Reasonable presentation and compliance with IFRS

Application of IFRS together with appropriate disclosures results in :

Reasonable presentation.

Include in notes an explicit and unreserved statement of compliance with IFRS .

Not disclose compliance if all standards and interpretations are not met .

The use of inappropriate accounting policies is not remedied with disclosures or explanations.

<IAS 1.15, 16 y 18>

General considerations Business on the move

When developing FS:

Evaluate ability to continue as a business in progress.

At least, but not limited to 12 months after the date of the balance.

Use an ongoing business base, unless:

There is an intention to liquidate the entity or cease operations.

There is no other realistic alternative

There is an intention to stop trading on the stock exchange.

Reveal uncertainties that result

in

substantial doubt about ongoing business.

continuity

as

an

When FS are not prepared under an ongoing business base, it must be disclosed:

Reason not to use it.

Base used.

<IAS 1.25 y 26>

General considerations

Accounting accrual

General considerations Accounting accrual Prepare FS on the basis of accounting accrual. • Does not apply

Prepare FS on the basis of accounting accrual.

Does not apply in the statement of cash flows. <IAS 1.27>

General considerations

Materiality and grouping

The two rules to follow to determine if some items can be grouped or not, are :

Separate presentation of each material class of similar items.

Grouping of intangible amounts with different heading types.

The disclosure requirements of IFRS and Interpretations do not need to be met if the information is immaterial.

<IAS 1.29 a 31>

General Rule:

Material items = Presentation separately

Intangible amounts= Grouped in similar concepts.

General considerations

Compensation

Do not compensate items unless allowed or required by a specific rule.

May decrease the ability to understand transactions and evaluate future flows.

It is not considered compensation:

Net assets of valuation reserves, e.g.

Estimates of uncollectible or low inventory value.

Discounts and rebates on purchase or sales prices.

Income and costs of incidental operations, e.g.

Asset Sales.

Provisions (IAS 37) reimbursed contractually by a third party.

Gains and losses of similar transactions, e.g.

Currency fluctuations.

Gains and losses of financial instruments of negotiation.

<IAS 1.32 a 35>

General considerations

Frequency of preparation

General considerations Frequency of preparation FS at least annually. When the closing date is changed and

FS at least annually.

When the closing date is changed and FS is drawn up for a

period greater or less than one year, disclose:

Reason to use this period.

The fact that the figures are not fully comparable.

<IAS 1.36>

General considerations

Comparative information

Regarding the previous period.

Quantitative information.

Narrative and descriptive information.

When the presentation or classification is modified, reclassify comparative amounts

If there are reclassifications, reveal:

Nature and reason of reclassification.

Amount of each reclassified item.

If it is not practical, reveal:

Reason not to reclassify.

The nature of the adjustments that had been made.

<IAS 1.38, 41 y 42>

General considerations

Consistency in the presentation

Same presentation and classification of games from one period to the next, unless:

There is a change in the nature of operations.

An FS review shows that a change is more appropriate.

The change is required by IFRS or interpretation.

<IAS 1.45>

Consistency Consistency 2011 v Consistency 2012 2013
Consistency
Consistency
2011
v
Consistency
2012
2013

Structure and content

Format

IAS 1 does not require a preset EF format.

It is flexible in this regard.

However, he describes:

The components and minimum

requirements for presentation and

disclosure.

Additional games that may be submitted in the states or their notes.

The implementation guidelines of IAS 1 include examples, which:

They are illustrative only.

They include a presentation order that can be modified.

<IAS 1.47 y 48, iGAAP 2014 A4, 2.12 p.1>

that can be modified. <IAS 1.47 y 48, iGAAP 2014 A4, 2.12 p.1> IAS 1 Presentación
Status of financial situation IAS 1 Presentación de Estados Financieros 14

Status of financial situation

Status of financial situation Minimum submission requirements

In the body of the balance:

Property, plant and equipment

Investment property

Intangible assets

Financial assets and liabilities

Investments under participation method

Biological assets

Inventories

Clients and other CXC

Cash and equivalents

Assets and liabilities classified as available for sale

Suppliers and other CXP

Provisions

Tax payable and receivable

Deferred tax assets and liabilities

Non-controlling interest (in capital)

Issued shares and reserves attributable to the shareholders of the parent

<IAS 1.54>

In the body of the balance sheet, statement of changes in stockholders' equity or in notes:

Subclassifications of items

For each class of action / social part:

Number of authorized actions

Number of shares issued

Nominal value of the shares or not

Reconciliation of shares issued at the beginning and end of the period

Rights, preferences and restrictions

Treasury shares

Shares reserved for issuance under options and other contracts

Nature and purpose of each reserve in

equity:

A suitable name may be enough

Reclassifications of certain financial instruments

<IAS 1.79, 80>

Status of financial situation

Classification - Distinction between current and non-current

Exception: liquidity presentation can be used when providing reliable and more relevant information

Items that meet any of the following are classified as current:

They are expected to perform, consume or pay in the normal cycle of operations

They are kept in order to negotiate

They are expected to be made or your payment is due within 12 months (after the balance date)

They are cash or equivalent, unless they are restricted for more than 12 months

If they are a liability, there is no unconditional right to defer their payment for more than 12

months

<IAS 1.60 y 69>

Status of financial situation

Debt classification

Status of financial situation Debt classification Long-term debt due for breach of a clause is current.

Long-term debt due for breach of a clause is current.

Even if during the subsequent period the creditor agrees not

to make the payment enforceable.

Unless at the balance sheet date the creditor grants a grace period of 12 months.

Debt is current:

Even if it is refinanced in the long term after the date of the statement of financial position.

<IAS 1.74 a 76>

Status of financial situation

Additional considerations

Additional items may be presented when relevant

Deferred taxes are always presented in the long term

The trial should be used to determine if additional items are

required considering:

Nature and liquidity of assets

- For example, consider assets that are measured on different bases

Role of assets within the entity

Amounts nature and maturity of liabilities

<IAS 1.55 a 58>

Income statement and other comprehensive income IAS 1 Presentación de Estados Financieros 19

Income statement and other comprehensive income

Income statement and other comprehensive income

Amendments - Submission of Items of Other Components of Comprehensive Income (“OCI”)

Background

The amendments to IAS 1 are the result of a joint effort between the

IASB and the FASB to provide guidance on the presentation of OCI

items and their classifications within

OCI.

Main changes

Two options are introduced to present the results and OCI,

such as:

A single “income statement

and OCI”, or.

Two separate but

consecutive states.

The concepts of OCI should be grouped considering whether

they will be reclassified to results (“recycled”) or not.

Similarly, the corresponding tax must be assigned to the OCI concepts.

It entered into force for annual periods beginning July 1, 2012 Retrospective application is required!

IAS 1 Presentación de Estados Financieros

20

Income statement and other comprehensive income

Two Options to Present the Income Statement and OCI

Option 1 (Single state)

Income statement and OCI

Results OCI Items not recycled * Recycled items *
Results
OCI
Items not recycled *
Recycled items *

* The corresponding tax must be assigned

Option 2 (Two separate but consecutive states)

Statement of income

Results

OCI

Results of the OCI year

Items not recycled *

Recycled items *

Income statement and other comprehensive income Minimum submission requirements

In the body of the state:

Income

Financial costs.

Participation in profit of associates accounted

for by the participation method.

In the body of the state or in notes:

OCI Tax Effect.

OCI Reclassifications:

Earnings made from the sale of assets

available for sale.

Tax expense.

Sale of foreign operations.

A single line that includes the total discontinued

Reduction of inventories at their net

operations

Net income for the period *

Other components of comprehensive income (OCI)

Participation in OCI of associates

Comprehensive utility *

* Segregate in:

Attributable to non-controlling interest

Attributable to owners of the holder

<IAS 1.81B y 82>

Realization value

Deterioration of property, plant and equipment

Provisions for restructuring

Reversal any of the previous items

Provision of property, plant and equipment or

investments

Discontinued operations

Settlement of trials

Reversal of other provisions

<IAS 1.90, 92, 94 y 98>

Income statement and other comprehensive income

Classification

Sort income and expenses by nature or function

The one that presents reliable and most relevant information.

If chosen by function, The choice depends on the history and factors of the industry and the nature of the entity

<IAS 1. 99, 104>, 205

For nature

Income

 

X

Other income

 

X

Variations in inventories of finished products and production in process

X

 

Raw materials and supplies used

X

 

Employee benefits costs

X

 

Depreciation and amortization

X

 

Other expenses

X

 

Total expenses

 

(X)

Utility

 

X

<IAS 1.102>

By function

Income

X

Sales cost

(X)

Gross profit

X

Other income

X

Distribution costs

(X)

Administration expenses

(X)

Other expenses

(X)

Utility

X

<IAS 1.103>

Income statement and other comprehensive income Additional considerations

Do not present extraordinary items

Additional items may be presented when relevant

If alternative performance measures are used consider discussion on the basis for conclusion of

<IAS 1 <BC.56>

For example, it is not required or prohibited to present operating income.

If operating income or a similar subtotal not defined by IAS 1 is included,

make sure that it includes ALL items that by their nature are operational, even if it is an industry practice to exclude them. Do not exclude for example:

o

Low inventory value

o

Restructuring or relocation expenses

o Depreciation or amortization

<IAS 1.87 y BC.56>

Income statement and other comprehensive income

Case study

MexTelecomunicaciones , is the world's leading company that provides a variety ofIncome statement and other comprehensive income Case study Background telecommunication services and equipment. Its

Background

telecommunication services and equipment. Its equipment and services allow its clients

to send or receive virtually any type of voice or data transmission.

Questionsor receive virtually any type of voice or data transmission. • See the income statement results

See the income statement results and other comprehensive results of MexTelecomunicaciones, which is presented below, and answer the following

questions:

Identify if it is presented by nature or by function

Identify

alternative performance measures (i.e. not required by IAS 1)

Conclude whether or not the presentation of such alternative performance measures is appropriate

Identify any other issue or observation you have

Income statement and other comprehensive income

Case study

MexTelecomunicaciones

Income

16,419

Costs of sale

(10,629)

Gross profit

5,790

Administration and sale expenses

(2,500)

EBITDA

3,290

Depreciation and amortization

(1,804)

Utility operation

1,486

Stock-based payments

(86)

Restructuring and impairment expenses of fixed assets

(138)

Profit on sale of fixed assets

161

Interest expense

(273)

Interest income

211

Participation in the losses of associates

(18)

Profit before taxes

1,343

Income tax

(130)

NET PROFIT

1,213

Other components of the comprehensive utility:

 

Asset revaluation gain

450

Tax effects related to other components of comprehensive income

(120)

Other components of comprehensive income, net of taxes

330

INTEGRAL UTILITY

1,543

Statement of changes in capital IAS 1 Presentación de Estados Financieros 27

Statement of changes in capital

Statement of changes in capital

Minimum submission requirements

In the body of the state:

Comprehensive income for the period *

Effects of changes in accounting policy and error correction (according to IAS 8)

Initial, final balance and movement of the period distinguishing those from:

Results of the period

OCI

Capital transactions with shareholders

* Segregate in:

Attributable to non-controlling interest

Attributable to owners of the holder

<IAS 1. 83,106>

In the body of the state or in notes:

Dividends including dividends by action

<IAS 1.107>

Statement of cash flows IAS 1 Presentación de Estados Financieros 29

Statement of cash flows

Statement of cash flows

Statement of cash flows IAS 7, Cash Flow Statement, indicates the requirements for the presentation of

IAS 7, Cash Flow Statement, indicates the requirements for the presentation of the Cash Flow Statement and the

corresponding disclosures.

<IAS 1.111>

Notes IAS 1 Presentación de Estados Financieros 31

Notes

Notes

They must include:

FS elaboration bases

IFRS compliance statement

Accounting policies

Sources of uncertainty in accounting estimates

Critical accounting judgments and key

assumptions used

Disclosures required by other IFRS

For example IFRS 7, financial instrument disclosures

Additional disclosures deemed relevant

Other revelations

Objectives capital

management processes and policies

Post-Closing Dividends

Unrecognized cumulative preferred dividends

Domicile and legal form, including

duration of the entity (if limited in

life)

Name of direct holder and group holder

They must be presented systematically

Include cross references

<IAS 1.112, 113, 117, 122, 125, 134, 137 y 138>