Chapter 3: of changes in equity and statement of cash flows, in the order
NOTES TO FINANCIAL STATEMENTS in which each statement and each line item is presented
Other disclosures, including:
Chapter Objectives:
contingent liabilities and unrecognized contractual
To know the nature of statement of financial position.
commitments
To understand the current and noncurrent classifications of
non-financial disclosures, such as the entity's financial risk
assets and liabilities.
management objectives and policies
To understand refinancing of a currently maturing debt.
To identify the components of equity in a corporation.
Other disclosures
To identify the minimum line items in a statement of financial
position.
Judgments and key assumptions
To be able to prepare a statement of financial position using
Philippine format and IFRS format.
An entity must disclose, in the summary of significant accounting
policies or other notes, the judgments, apart from those involving
estimations, that management has made in the process of
NOTES TO THE FINANCIAL STATEMENTS
applying the entity's accounting policies that have the most
significant effect on the amounts recognized in the financial
The notes must:
statements.
present information about the basis of preparation of the
financial statements and the specific accounting policies used
Examples include management's judgments in
disclose any information required by IFRSs that is not
determining:
presented elsewhere in the financial statements and
when substantially all the significant risks and rewards of
provide additional information that is not presented elsewhere
ownership of financial assets and lease assets are transferred
in the financial statements but is relevant to an understanding
to other entities
of any of them
whether, in substance, particular sales of goods are financing
arrangements and therefore do not give rise to revenue.
Notes are presented in a systematic manner and cross-referenced
from the face of the financial statements to the relevant note.
An entity must also disclose, in the notes, information about the
key assumptions concerning the future, and other key sources of
Order of Presenting the Notes
estimation uncertainty at the end of the reporting period, that
A statement of compliance with IFRSs
have a significant risk of causing a material adjustment to the
A summary of significant accounting policies applied,
carrying amounts of assets and liabilities within the next financial
including:
year. These disclosures do not involve disclosing budgets or
- the measurement basis (or bases) used in preparing the
forecasts.
financial statements
- the other accounting policies used that are relevant to an
Dividends
understanding of the financial statements
Supporting information for items presented on the face of the
In addition to the distributions information in the statement of
statement of financial position (balance sheet), statement(s)
changes in equity, the following must be disclosed in the notes:
of profit or loss and other comprehensive income, statement
the amount of dividends proposed or declared before the
financial statements were authorized for issue but which were
not recognized as a distribution to owners during the period,
and the related amount per share
the amount of any cumulative preference dividends not
recognized.
Capital disclosures
An entity discloses information about its objectives, policies and
processes for managing capital. To comply with this, the
disclosures include:
qualitative information about the entity's objectives, policies
and processes for managing capital, including>
description of capital it manages nature of external capital
requirements, if any
how it is meeting its objectives
quantitative data about what the entity regards as capital
changes from one period to another
whether the entity has complied with any external capital
requirements and
if it has not complied, the consequences of such non-
compliance.
-End of Discussion-