Overview:
IAS 1 presents the requirement of the Statement of Comprehensive Income in two parts: the Statement of Profit or Loss (P/L) and the Other Comprehensive Income (OCI). With the recognition of Other Comprehensive Income, IAS 1 also includes an item on the Equity of the Balance Sheet entitled "Other Components of Equity".
As a requirement of the IAS 1 – Statement of Profit or Loss, except for the circumstances where incomes or expenses arising from the change in the carrying amount of an asset or liability should be included in Other Comprehensive Income, and “Other Components of Equity” on Balance Sheet, the IAS 1 presents all incomes and expenses of the entity during the period. Items recorded in “Other Components of Equity” shall be transferred to the Profit or Loss statement in the subsequent accounting period where they meet the condition to be recognized in the statement of Profit or Loss.
As a result, the current Profit or Loss statements under VAS will change, some gain/loss will be excluded and transferred to Others Comprehensive Income statement (OCI).
OCI presents two specific categories:
An item that subsequently be reclassified to Profit or Loss statements including the Currency transaction differences, Changes in fair value (except for the revaluation of PPE), Cash-flow hedge, etc
An item that subsequently not be reclassified to Profit or Loss statement: Revaluation of PPE, Gains and losses from financial assets, etc
- An item that subsequently be reclassified to Profit or Loss statements including the Currency transaction differences, Changes in fair value (except for the revaluation of PPE), Cash-flow hedge, etc.
- An item that subsequently not be reclassified to Profit or Loss statements including Revaluation of PPE, Gains and losses from financial assets, etc.
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Topic |
IFRS |
VAS |
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IAS 1 vs VAS 21 – PRESENTATION OF FINANCIAL STATEMENTS |
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Components of Financial Statements |
Minimum requirements: a) Statement of financial position b) Statement of Profit or Loss (P/L) and Other Comprehendsive Income for the period (separated or combined) c) Statement of Changes in Equity for the period d) Statement of Cash Flow for the period e) Notes, comprising a summary of significant accounting policies and other explanatory information f) Comparative information in respect of the preceding period g) Statement of financial position as of the beginning of the earliest comparative period (when applying change/retrospective in accounting policy, reallocation, reclassify items) |
Minimum requirements: a) Balance Sheet b) Statement of Profit or Loss c) Statement of Changes in Equity presented as a note d) Statement of Cash Flow for the period e) Notes to the financial statements |
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Statement of Cash Flow for the period |
An entity shall present separately current and non-current assets, current and non-current liabilities. Except if a presentation based on descending order of their liquidity delivers more reliable and relevant information. |
An entity should present separately current and non-current assets, current and non-current liabilities. When classification is not possible, the report will be presented based on descending order of their liquidity. |
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Statement of financial position/ Balance Sheet format |
No order required on presentation. |
The Balance Sheet is presented in applicable regulations and guidance. |
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Income statements/ Statement of Comprehensive Income |
Two optional formats: a)In a single Statement of Comprehensive Income b) In 2 separate statements: Income statement (P/L) and Other Comprehensive Income (OCI). |
In a single Statement of Comprehensive Income. |
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Dividends disclosure |
Disclose in the notes or the Statement of Changes in Equity. |
An entity should disclose the amount of dividend per share, the date announced or proposed to pay. This information is allowed to disclose in the notes. |
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Change in equity |
An entity must present a Statement of Changes in Equity which included: (a) Total comprehensive income for the period, presented separately to owners of the parent company and to non-controlling shareholders; (b) For each component of equity, the effect of retrospective application or retroactive adjustment of IAS 8; and (c) For each component of equity, reconcile the amounts at the beginning and the end of the period, and separately disclose (at a minimum) the changes resulting from: (i) profit or loss; (ii) other comprehensive income; and (iii) transactions with the entity's owners as shareholders, presenting the equity share of the owners, distribution to the owners, as well as the change in the percentage of ownership in the subsidiaries without losing control;
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The entity must present in the Notes to the financial statement information reflecting the change in equity: a) Net profit or loss for the period; b) Income and expenses, profit or loss are recorded directly in equity following other accounting standards and the sum of these factors; c) The cumulative effects of changes in accounting policies and the correction of fundamental errors are covered by the accounting methods section of “Net profit and loss for the period, fundamental errors and changes in accounting policies”; d) Capital transactions with owners, the distribution of dividends and profits to owners; e) Balances of accumulated gains and losses at the beginning and end of the period, and movements during the period; and f) Reconciling the book value of each class of contributed capital, share premium, reserves at the beginning and end of the period, and presenting movements. |
The Company can refer to the Financial Statements prepared under IFRS at: https://ifrs.vn/mau-bao-cao-ifrs/ to get an overview of the items in the Financial Statements and prepare the appropriate knowledge to apply at the Company.
What must be done?
- To include Statement of Changes in Equity at the transition.
- To understand the nature and requirements of Other Comprehensive Income statements, clearly classify the differences between “non-reclassified items” and “subsequent reclassify items”.
- To identify items under Other Comprehensive Income at the transition date.
- To estimate the impact of applying the changes to Profit or Loss and Other Comprehensive Income.
- Identify key differences between Short-term and Long-term Balance Sheet items, impact on the financial ratios, and Loan covenants condition.