INTERMEDIATE ACCOUNTING 3
Chapter 2: Statement of Comprehensive Income
Statement of profit or loss and other comprehensive a. Nature of Expense Method – expenses are
income aggregated to their nature and not reallocated
according to their functions
An entity shall present all items of income and expense
b. Function of Expense – entity classifies expenses
recognized in a period:
according to their function
1. in a single statement of profit or loss and other
comprehensive income; or
2. in two statements: (1) a statement displaying the Other comprehensive income for the period
profit or loss section only (separate ‘statement of
a. Changes in revaluation surplus
profit or loss’ or ‘income statement’) and (2) a
b. Unrealized gains and losses on investments in
second statement beginning with profit or loss and
FVOCI securities
displaying components of other comprehensive
c. Remeasurements of the net defined benefit liability
income.
(asset)
PAS 1 requires to present information on: d. Gains and losses arising from translating the
financial statements of a foreign operation
1. Profit or Loss
e. Effective portion of gains and losses on hedging
2. Other Comprehensive Income
instruments in a cash flow hedge
3. Comprehensive Income
OCI may be presented either (a) net of tax or (b) gross of
tax.
*When you present a separate income statement make
sure that there is also a separate comprehensive income
presented along with it as presenting an income Reclassification Adjustments
statement alone is prohibited.
Reclassification adjustments are amounts reclassified to
profit or loss in the current period that were recognized
in other comprehensive income in the current or
Profit or Loss
previous periods.
- income less expense (excluding other comprehensive
income)
- excess = profit
- deficiency = loss
Income and Expense are recognized in profit or loss,
except;
1. they are items of OCI
2. other PFRS requires them to be recognized
outside of profit or loss
What transactions are not included in determining
profit or loss? Total Comprehensive Income
1. Correction of Prior Period Error Total comprehensive income comprises all components
2. Change in Accounting Policy of
3. Other Comprehensive Income 1. Profit or loss; and
4. Transactions with Owners 2. Other comprehensive income.
Extraordinary Items Presentation of Expenses
PAS 1 prohibits the presentation of any items of income 1. Nature of expense method
or expense as extraordinary items in the in the 2. Function of expense method
statement(s) presenting profit or loss and other
comprehensive income or in the notes. If an entity classifies expenses by function, it shall
disclose additional information on the nature of expenses
Presentation of Expenses
Disclosure Of Dividends
INTERMEDIATE ACCOUNTING 3
Chapter 2: Statement of Comprehensive Income
Dividends declared by an entity are disclosed either in
the (a) notes or (b) statement of changes in equity.
Order Of Presentation of Disclosures in the Notes
1. Statement of compliance with PFRSs;
2. Summary of significant accounting policies
applied;
3. Supporting information for items presented in the
other financial statements; and
4. Other disclosures.
