ACCA P2 (HKG) Corporate Reporting HKAS 1 Presentation of Financial Statements (revised 2007) 17 Oct 2008 Dr. Gary Leung

Introduction  Phase A in presentation project  Limited impact  Effective: annual periods beginning on or after 1 Jan 2009  Notes- only include the changes in format of financial statements 2

Key changes  Titles of financial statements – “Balance Sheet” will become “Statement of financial position” – “Income statement” will become “ Statement of comprehensive income” – “Cash flow statement” will be come “Statement of cash flows” – “Statement of changes in equity remains unchanged.  Disclose income tax relating to each component of other comprehensive income.  Disclose reclassification adjustments relating to components of other comprehensive income. 3

Financial Statements  A complete set of financial statements includes – Statement of financial position – Statement of comprehensive income, this will include; Profit or loss for the period, and Other comprehensive income recognised in the period. – A statement of changes in equity – Statement of cash flows – Accounting policies and explanatory notes. 4

Statement of Financial Position  Present a statement of financial position (balance sheet) as at the beginning of the earliest comparative period in a complete set of financial statements when the entity applies an accounting policy retrospectively or makes a retrospective restatement. (i.e. 3 years’ balance sheet) 5

Statement of Comprehensive Income  All items of income and expense recognised in a period must be presented either: – in a single statement of comprehensive income; or – in two statements: a statement displaying components of profit or loss (separate income statement); and a second statement beginning with profit or loss and displaying components of other comprehensive income. 6

Statement of Comprehensive Income  Comprehensive income for a period includes profit or loss for that period plus other comprehensive income recognised in that period. The components of other comprehensive income include: – Changes in revaluation surplus (HKAS 16 & HKAS 38) – Actuarial gains and losses on defined benefit plans recognised in accordance with paragraph 93A of HKAS 19 – Gains and losses arising from translating the financial statements of a foreign operation or from functional to presentation currency (HKAS 21) – Gains and losses on remeasuring available-for-sale financial assets (HKAS 39) – The effective portion of gains and losses on hedging instruments in cash flow hedge (HKAS 39) 7

Other comprehensive income  Components of other comprehensive income may be presented either: – net of related tax effects; or – before related tax effects with one amount shown for the aggregate amount of related tax effects. 8

Statement of Changes in Equity  An entity should present as a separate component of its financial statements, a statement showing: – total comprehensive income for the period, showing separately the total amounts attributable to owners of the parent and to minority interest;; – for each component of equity, the effects of retrospective application or retrospective restatement (per HKAS 8); – the amounts of transactions with owners in their capacity as owners, showing separately contributions and distributions; and – for each component of equity, a reconciliation between the carrying amount at the beginning and the end of the period, disclosing each change separately. 9