Statement of Comprehensive Income
Monday, 4 September 2023 9:54 am
- Change in equity during a period resulting from transactions and other events, other than change
resulting from transaction with owners in their capacity as owners
- Presents values for a period of time
- Components:
○ Profit or loss (Net Income)
○ Other Comprehensive Income
Other Comprehensive Income
- Items of income expense including reclassification adjustments that are not recognized in profit or
loss required or permitted by PFRS
- Components:
○ Recycled to Profit/Loss
Gain/Loss from translating financial statements of a foreign operation
Unrealized gain/loss on derivative contracts designated as cash flow hedge
Unrealized gain/loss on debt investment measured at FVOCI
○ Recycled to Retained Earnings
Unrealized gain/loss on equity investment measured at FVOCI
Change in revaluation surplus(PPE)(opposite of depreciation)
Remeasurement of defined benefit plan (Actuarial Gains/Losses)
Change in FV attributable to credit risk of financial liability designated at FVPL
Presentation
- Two Statement
○ One income statement
○ Comprehensive income statement
- One Statement
○ Comprehensive income statement
- There are no Extraordinary gains/losses
One Statement Income
- No prescribed format
- Whichever provides more relevant information
Statement of Changes in Equity
- Residual interest in the assets of an entity after deducting all of the liabilities
- Net assets
○ Assets - Liabilities = Equity
- Statement of Changes in Equity
○ Shows movements in the elements or components of equity
Changes in Accounting Estimate
- Adjustment of the carrying amount of an asset or a liability, or the amount of the periodic
consumption of an asset
- Normal recurring correction or adjustment which is inherent in an estimate
○ Change in depreciation method
○ Change in estimate of bad debts
- Occur as a result of new information, more experience or substantial development
- Treatment:
○ Currently
○ Prospectively
Future Periods
Accounting Policy
- Specific principle, basis convention, rule and practice used by an entity
- Chang in Accounting Policy
○ An entity adopts a GAAP which is different from the one they are using currently
○ Change in the method of inventory pricing (FIFO, Weighted Average)
○ Change in the method of accounting for long term construction contract
○ The initial adoption of policy to carry assets at revalued amount
○ Change from cost model to fair value model in measuring investment property
○ Change to a new policy resulting from requirement of a new PFRS
- Why?
○ Required by an accounting standard
○ Change will result to a more relevant or reliable information
- Treatment
○ Transitional Provision
○ Retrospectively/Retroactively
If there is no transitional provision
Applying the new accounting policy as if that policy had always been applied
Balance Sheet Accounts
□ Third statement of financial position
Income Statement Accounts
□ Any change is reported as adjustment to opening balance of Retained Earnings
in the earliest period presented
Prospectively
□ Only used when retrospective application cannot be used
□ Applying the new accounting policy after the date of change
No specific accounting standard
□ Select in the order of priority:
Requirements of current standards dealing with similar matters
Definition, recognition criteria and measurement concepts in the
Conceptual Framework
Most recent pronouncements of other standard-setting bodies that use a
similar Conceptual Framework, other accounting literature and accepted
industry practices
Change in Reporting Entity
□ Change in an entity's nature report in such a way that the FS are in effect those
of a different reporting entity
Jollibee Foods -> Jollibee Hotel
□ Change in accounting policy
- If Accounting Policy or Accounting Estimate
○ Treated as an accounting estimate with appropriate disclosure
Prior Period Error
- Omissions from and misstatements in the FS
- Mathematical mistakes
- Mistakes in applying accounting policies
- Misinterpretation of facts
- Fraud or oversight
- Treatment
○ Retrospective restatement
Correcting the error as if it never happened
Adjust beginning Retained Earnings
Error
(X) GAAP GAAP
• Bad Debts • Bad debts
- Direct Write off Method - Allowance Method
Inventory - Inventory
- LIFO - FIFO/Average
Reporting - Reporting
- Cash Basis - Accrual Basis
Not GAAP -> GAAP = Correction of Error