National University of Computer and Emerging Sciences

SUMMARY OF IAS NO.1

Submitted to :
Mr. Hanif

Submitted by :
Bilal Hussain 131-1210
Sheharyar Ameen I12-1202
Muhammad Arslan Khalid 131-1211

MBA Morning
Summary of IAS 1
This standard is the means by which general purpose financial statements are prepared and
compared as a time series or against other companies. This standard is meant to apply to
profit oriented companies for non profit oriented companies the wording is changed. This
standard equally applicable to consolidated financial statements and Separate Financial
Statements, it does not apply to IAS 34 Interim Financial Statements. International Financial
Reporting Standard are published by the International Accounting Standards board they apply
equally to IAS, IFRIC and SIC and all accounts are made based on IFRS. Other
Comprehensive income consists of changes in revaluation reserve, gains and losses on
currency translation in other comprehensive income statement, gains and losses on defined
benefit obligations, changes in hedging instruments, for particular liabilities recognized at fair
value, recognition of credit risk change.
For Puttable financial instruments which are classified as equity the net amount that must be
delivered in case of liquidation is classed as equity.
The aim of the financial statements is provision of financial position and financial
performance information regarding equity, assets, liabilities, expense, income and cash flows,
and contributions/ distributions to owners.
A full set of financial statements include: income statement, other comprehensive income, a
balance sheet, statement of cash flow, notes, statement of changes in equity and comparative
financial statements. A review by the management is presented that tackle the principle
uncertainties that relate to the environment in which business is conducted, the liabilities to
equity ratio, entities resources not recognized in the financial statements.
Fair Presentation:
Financial statements are prepared based on fair presentation which means that the reports
faithfully represent the substance of the events that shape a transaction. Compliance with
IFRS shall be clearly written in the notes. There is no rectification of inappropriate
accounting policy. In case if there is a need to depart from the standards it shall have to
disclose that management concludes that the financial statements are true and fair, that it has
otherwise complied with IFRS, the IFRS title, nature of the departure and why this treatment
is misleading and in the end the financial effects of the departure. This standard also applies
in case if the entity departed in the prior period from this requirement and departure affected
the current period. In case if departure is prohibited disclosure is required of the title of IFRS
reasons for its departure and adjustment to each item in the financial statement.
Going Concern basis:
the entity makes an assessment of whether the business is a going concern unless
management intends to liquidate the business
Accruals basis:
Financial statements are prepared based on an accruals basis
Materiality:
An entity reports similar items that are material and provide separate presentation of
dissimilar items unless immaterial.
Offsetting:
Any two items will not offset each other unless required by the standard. Revenue is
measured at Fair value of consideration taking into account rebates and discounts. The results
of such transactions are presented when netting income with expense.
Frequency of Reporting:
The financial statements are prepared annually disclosures must be made for using shorter
period and when amounts presented are not comparable.
Comparative Periods:
When IFRS requires otherwise, an entity shall disclose comparative information regarding
previous periods for all values in the current period. In case of reclassification disclosure is
provided with regards to its nature, amount reclassified or reason for reclassification. When
reclassification is impracticable the reasons for not reclassifying and the nature of the
adjustment had the amounts been reclassified are disclosed. IAS 8 deals with accounting
estimate change and judgement.
Consistency:
An entity retains presentations and reclassifications unless there is a change in its nature an
IFRS requires a change in presentation.
Identification of financial statements:
Information is displayed regarding its name, level of rounding, date of publication, the
presentation and whether the company is an individual. Disclosure of all judgements is
required.
Balance Sheet:
A company makes judgements about line items based on an assessment of the nature, amount
and function of assets
Distinction:
Entities presents current and long term assets as separate items in its financial statements
based on whether they fall due in twelve months or more than twelve months..
Current Assets:
Assets are current if realized in 12 months, they are held for the purpose of trading, they are
realized and sold in one operating cycle lastly the asset is restricted from being settled or
exchanged.
Current liabilities:
Liabilities are current if they are settled in 12 months, they are held for the purpose of
trading, they are settled in one operating cycle lastly there is no deferral of settlement for an
additional 12 months and there is an agreement to refinance payments on a long term basis
before financial statements are published
Information in Balance Sheet or notes:
A company shall disclose additional line items classified as appropriate to the companies
operations. For e.g. Property plant and equipment, Recievables, inventories, equity capital
and reserves and provisions for employee benefits.
For each class of share capital the number of shares authorized,fully paid and issued, par
value per share, reconciliation of the outstanding shares, rights, preferences and restrictions
of each class, subsidiary holdings, shares reserved for options.
Income statement and Comprehensive Income statement:
Comprehensive income and Profit or loss owing to controlling parties and non controlling
parties are reported. Information includes revenues, gain or loss arising from derecognition of
assets, finance cost, share of profit or loss from joint ventures using equity method, tax paid
during the year and a value for discontinued operations.
Line items that are not reclassified subsequently to profit or loss and will be subsequently
reclassified when conditions are met shall be presented.
An entity presents additional line items when it is relevant to understanding the financial
performance.
There is no presentation of extraordinary items in the profit and loss statement, other
comprehensive income statement or in the notes.

Profit or loss for the period:
An entity recognizes items of revenue and expense separately.
Other Comprehensive Income:
An entity discloses amount of income tax related to each item and shall disclose
reclassification adjustments e.g disposal of foreign operations, changes in revaluation reserve
etc.
Information to be presented in the statement of profit or loss or in the notes:
When items are material, an entity discloses their nature and value separately. Such items
include write-down of inventory, disposal of assets and investments, restructuring of
activities of entity and reversals litigation settlements, discontinued operations, and other
reversals,
Expenses can be shown in the profit or loss by nature for example:
Revenue x
Other income x
Direct material x
Direct labour x
Total expense x
Profit before tax x
Or expenses can be shown by function for example
Revenue
Cost of goods sold
Gross profit
Total expense
Profit before tax
Additional items based on the nature of expenses shall also be used.
Statement of changes in equity:
An entity provides separate presentation of amounts owing to owners and non controlling
interests, for each component of equity retrospective restatement. It also presents transaction
owing to and not owing to the capacity of owners.
Cash Flow Statement:
This provides an assessment of the entities ability to generate cash and cash equivalents.
Notes:
These provide information about the basis of preparation of financial statements, IFRS
requirements, information otherwise not presented elsewhere in the financial statements.
An entity shall provide separate disclosure of each line item in the financial statements.
Accounting Policies Disclosure:
An entity will also disclose the measurement basis used e.g. fair value, historic cost and
current cost and policies relevant to the financial statements e.g. policy with regards to tax
and financial reporting etc. An entity also discloses the judgements passed by management in
making those estimates.
Sources of Estimation uncertainty:
An entity discloses assumptions it makes about the future, and other items that could affect
the carrying amount of assets and liabilities, the notes will include specific details, carrying
amounts examples of details include the effect of technological obsolescence examples of
carrying amounts include the sensitivity of carrying amounts, expected resolution of an
uncertainty and explanation of changes made to past assumptions.
Capital:
An entity shall disclose information regarding the description of the capital, externally
imposed capital requirements and how it manages capital.
Puttable Financial Instruments classed as Equity:
An entity must disclose a summary of the quantitative data, its objectives, for managing its
repurchase of the instrument, the expected outflow of cash on redemption and information
about how the cash outflow was determined.
Other disclosures:
A company discloses proposed dividends before the publication of financial statements and
the amount of any cumulative preferred dividends
A company should disclose its legal form, address of registered offices and its country of
incorporation. A description of its nature, the name of the parent and if it has a limited life.