PKHNM

Presentation of Financial Statements (Ind

AS 1)
Objective of Ind AS 1
Indian Accounting Standard (Ind AS) 1, Presentation of Financial Statements,
prescribes the basis for presentation of general purpose financial
statements. The basic purpose of this Standard is to ensure comparability both
with the entity’s financial statements of previous periods and with the
financial statements of other entities. It sets out overall requirements for the
presentation of financial statements, guidelines for their structure and
minimum requirements for their content.

Scope
Every entity preparing and presenting general purpose financial statements in
accordance with Ind AS should apply this Standard.
Other Indian Accounting Standards (Ind ASs) supplement the requirements of Ind AS
1 by setting out the recognition, measurement and disclosure requirements for
specific transactions and other events.

Purpose of Financial Statements

The objective of general purpose financial statements is to provide information
about the financial position, financial performance, and cash flows of an entity
that is useful to a wide range of users in making economic decisions. To meet the
objective, financial statements provide information about an entity’s:
 assets;
 liabilities;
 equity;
 income and expenses, including gains and losses;
 contributions by and distributions to owners in their capacity as
owners; and
 cash flows.
That information, along with other information in the notes, assists users of financial
statements in predicting the entity’s future cash flows and, in particular, their timing
and certainty.
Complete set of Financial Statements
A complete set of financial statements comprises:
 a balance sheet as at the end of the period;
 a statement of profit and loss for the period;
 statement of changes in equity for the period;
 a statement of cash flows for the period;
  notes, comprising significant accounting policies and other explanatory
information;
 comparative information in respect of the preceding period;
 a balance sheet as at the beginning of the preceding period when an entity
applies an accounting policy retrospectively or makes a retrospective
restatements of items in its financial statements, or when it reclassifies items
in its financial statements.
An entity shall present a single statement of profit and loss, with profit or loss and
other comprehensive income presented in two sections. The sections shall be
presented together, with the profit or loss section presented first followed directly by
the other comprehensive income section.
Many entities present reports and statements such as financial reviews by
management, environmental reports, and value added statements that are outside
the financial statements. Such reports and statements that are outside the financial
statements are outside the scope of Ind ASs.
General Features
Presentation of true and fair view and compliance with Ind Ass
The financial statements must present a true and fair view of the financial position,
financial performance and cash flows of an entity. Presentation of true and fair view
requires the faithful representation of the effects of transactions, other events and
conditions in accordance with the definitions and recognition criteria for assets,
liabilities, income and expenses set out in the Framework. The application of Ind ASs,
with additional disclosure when necessary, is presumed to result in financial
statements that present a true and fair view.
An entity whose financial statements comply with Ind AS is required to make an
explicit and unreserved statement of such compliance in the notes. Financial
statements shall not be described as complying with Ind AS unless they comply with
all the requirements of Ind ASs.
It is not permissible for an entity to rectify inappropriate accounting policies either by
disclosure of the accounting policies used or by notes or explanatory material.
Following exception has been given in the Standard where an entity can depart from
requirement of an Ind AS:
In extremely rare circumstances, management may conclude that compliance with
an Ind AS requirement would be so misleading that it would conflict with the
objective of financial statements set out in the Framework. In such circumstances,
the entity should depart from the Ind AS, if the relevant regulatory framework
requires, or otherwise does not prohibit, such a departure. In that case disclosures as
required by the Standard should be made.
The Standard further provides that in the extremely rare circumstances in which
management concludes that compliance with a requirement in an Ind AS would be so
misleading that it would conflict with the objective of financial statements set out in
the Framework, but the relevant regulatory framework prohibits departure from the
requirement, the entity shall, to the maximum extent possible, reduce the perceived
misleading aspects of compliance by making certain disclosures.
Going Concern
Financial statements prepared under Ind AS should be prepared on a going
concern basis unless management either intends to liquidate the entity or to cease
trading, or has no realistic alternative but to do so. If management has significant
doubt of the entity’s ability to continue as a going concern, the uncertainties
should be disclosed. In case the financial statements are not prepared on a going
concern basis, the entity should disclose the basis of preparation of financial
statements and also the reason why the entity is not regarded as a going concern.

Accrual Basis of Accounting

An entity is required to prepare its financial statements, except for cash flow
information, using the accrual basis of accounting.

Materiality and Aggregation

An entity shall present separately each material class of similar items. An
entity shall present separately items of a dissimilar nature or function
unless they are immaterial except when required by law.
When applying Ind ASs an entity shall decide, taking into consideration all relevant
facts and circumstances, how it aggregates information in the financial statements,
which include the notes. An entity shall not reduce the understandability of its
financial statements by obscuring material information with immaterial
information or by aggregating material items that have different natures or
functions.
Some Ind ASs specify information that is required to be included in the financial
statements, which include the notes. An entity need not provide a specific disclosure
required by an Ind AS if the information resulting from that disclosure is not material
except when required by law. This is the case even if the Ind AS contains a list of
specific requirements or disclosures them as minimum requirements. An entity shall
also consider whether to provide additional disclosures when compliance with the
specific requirements in Ind AS is insufficient to enable users to understand the
impact of the particular transactions, other events and conditions on the entity’s
financial position and financial performance.

Offsetting
Assets and liabilities, and income and expenses, may not be offset unless
required or permitted by an Ind AS.

Frequency of Reporting
An entity should present a complete set of financial statements (including
comparative information) at least annually. When an entity changes the end of its
reporting period and presents financial statements for a period longer or shorter
than one year, an entity should disclose, in addition to the period covered by
the financial statements, the reason for using a longer or shorter period, and the fact
that amounts presented in the financial statements are not entirely comparable.

Comparative Information
Minimum comparative information
An entity should present comparative information in respect of the
preceeding period for all amounts reported in the current period’s financial
statements except when Ind ASs permit or require otherwise. Comparative
information for narrative and descriptive information should be included if it is
relevant to understand the current period’s financial statements. An entity should
present, as a minimum, two balance sheets, two statements of profit and loss, two
statements of cash flows and two statements of changes in equity, and related notes.
Additional comparative information
An entity may present comparative information in addition to the minimum
comparative financial statements required by Ind ASs, as long as that information is
prepared in accordance with Ind ASs. This comparative information may consist of
one or more statements referred in ‘Complete set of financial statements’ but need
not comprise a complete set of financial statements.
Changes in accounting policy, retrospective restatement or reclassification
Paragraph 40A of Ind AS 1 requires that an entity should present a third balance
sheet as at the beginning of the preceding period in addition to the minimum
comparative financial statements if:
(a) it applies an accounting policy retrospectively, makes a retrospective restatement
of items in its financial statements or reclassifies items in its financial statements;
and
(b) the retrospective application, retrospective restatement or the reclassification has
a material effect on the information in the balance sheet at the beginning of the
preceding period.
If an entity changes the presentation or classification of items in its financial
statements, it should reclassify comparative amounts unless reclassification is
impracticable. When an entity reclassifies comparative amounts, it should disclose
(including as at the beginning of the preceding period):
(a) the nature of the reclassification;
(b) the amount of each item or class of items that is reclassified; and
(c) the reason for the reclassification.

Consistency of Presentation
Ind AS 1 requires that presentation and classification of items in the financial
statements shall be retained from one period to the next unless a change is
justified either by a change in situations or a requirement of another Ind AS.

Structure and Content

An entity should clearly identify the financial statements and distinguish them from
other information in the same published document.
Balance Sheet
Ind AS 1 does not prescribe the order or format for presentation of balance sheet.
However, Ind AS 1 requires the following line items to be included in the balance
sheet:
(a) property, plant and equipment;
(b) investment property;
(c) intangible assets;
(d) financial assets (excluding amounts shown under (e), (h), and (i));
(e) investments accounted for using the equity method;
(f) biological assets within the scope of Ind AS 41, Agriculture;
(g) inventories;
(h) trade and other receivables;
(i) cash and cash equivalents;
(j) the total of assets classified as held for sale and assets included in disposal groups
classified as held for sale in accordance with Ind AS 105 Non-current Assets Held for
Sale and Discontinued Operations;
(k) trade and other payables;
(l) provisions;
(m) financial liabilities (excluding amounts shown under (k) and (l));
(n) liabilities and assets for current tax, as defined in Ind AS 12;
(o) deferred tax liabilities and deferred tax assets, as defined in Ind AS 12;
(p) liabilities included in disposal groups classified as held for sale in accordance with
Ind AS 105;
(q) non-controlling interests, presented within equity; and
(r) issued capital and reserves attributable to owners of the parent.
It is permissible to present additional line items (including by disaggregating the line
items listed above), headings and sub totals, as relevant, to understand the entity’s
financial position.

Current/non-current distinction
Ind AS 1 provides that an entity should present current and non-current assets, and
current and non-current liabilities, as separate classifications in its balance sheet
except when a presentation based on liquidity provides information that is reliable
and more relevant.
Whichever method of presentation is adopted, an entity should disclose the
amount expected to be recovered or settled after more than twelve months
for each asset and liability line item that combines amounts expected to be
recovered or settled:
(a) no more than twelve months after the reporting period, and
(b) more than twelve months after the reporting period.
Ind AS 1 provides that an entity should classify an asset as current when:
(a) it expects to realise the asset, or intends to sell or consume it, in its normal
operating cycle;
(b) it holds the asset primarily for the purpose of trading;
(c) it expects to realise the asset within twelve months after the reporting period; or
(d) the asset is cash or a cash equivalent (as defined in Ind AS 7) unless the asset is
restricted from being exchanged or used to settle a liability for at least twelve
months after the reporting period.
An entity should classify all other assets as non-current.
Ind AS 1 provides that an entity should classify a liability as current when:
(a) it expects to settle the liability in its normal operating cycle;
(b) it holds the liability primarily for the purpose of trading;
(c) the liability is due to be settled within twelve months after the reporting period; or
(d) it does not have an unconditional right to defer settlement of the liability for at
least twelve months after the reporting period. Terms of a liability that could, at the
option of the counterparty, result in its settlement by the issue of equity instruments
do not affect its classification.
An entity should classify all other liabilities as non-current.
If an entity expects, and has the discretion, to refinance or roll over an existing loan
obligation for at least twelve months after the reporting period, the debt is classified
as non-current, even if it would otherwise be due within 12 months.
Where there is a breach of a material provision of a long-term loan arrangement on
or before the end of the reporting period with the effect that the liability becomes
payable on demand on the reporting date, the entity does not classify the liability as
current, if the lender agreed, after the reporting period and before the approval of
the financial statements for issue, not to demand payment as a consequence of the
breach.
The liability is classified as non-current if the lender agreed by the end of the
reporting period to provide a period of grace ending at least 12 months after the
reporting period, within which the entity can rectify the breach and during which the
lender cannot demand immediate repayment.
With regard to share capital, an entity shall disclose the following, either in the
balance sheet or the statement of changes in equity, or in the notes:
(a) for each class of share capital:
(i) the number of shares authorised;
(ii) the number of shares issued and fully paid, and issued but not fully paid;
(iii) par value per share, or that the shares have no par value;
(iv) a reconciliation of the number of shares outstanding at the beginning and at the
end of the period;
(v) the rights, preferences and restrictions attaching to that class including
restrictions on the distribution of dividends and the repayment of capital;
(vi) shares in the entity held by the entity or by its subsidiaries or associates; and
(vii) shares reserved for issue under options and contracts for the sale of shares,
including terms and amounts; and
(b) a description of the nature and purpose of each reserve within equity.
Statement of Profit and Loss
The statement of profit and loss shall present, in addition to the profit or loss and
other comprehensive income sections:
(a) profit or loss;
(b) total other comprehensive income;
(c) comprehensive income for the period, being the total of profit or loss and other
comprehensive income.
An entity should present the following items, in addition to the profit or loss and
other comprehensive income sections, as allocation of profit or loss and other
comprehensive income for the period:
(a) profit or loss for the period attributable to:
(i) non-controlling interests, and
(ii) owners of the parent.
(b) comprehensive income for the period attributable to:
(i) non-controlling interests, and
(ii) owners of the parent.
Information to be presented in the profit or loss section of the statement of
profit and loss
In addition to items required by other Ind ASs, the profit or loss section of the
statement of profit and loss should include line items that present the following
amounts for the period:
(a) revenue, presenting separately interest revenue calculated using the effective
interest method;
(b) gains and losses arising from the derecognition of financial assets measured at
amortised cost
(c) finance costs;
(d) impairment losses (including reversals of impairment losses or impairment gains)
determined in accordance with Section 5.5 of Ind AS 109
(e) share of the profit or loss of associates and joint ventures accounted for using the
equity method;
(f) if financial asset is reclassified out of the amortised cost measurement category so
that it is measured at fair value through profit or loss, any gain or loss arising from a
difference between the previous amortised cost of the financial asset and its fair
value at the reclassification date;
(g) if a financial asset is reclassified out of the fair value through other
comprehensive income measurement category so that it is measured at fair value
through profit or loss, any cumulative gain or loss previously recognized in other
comprehensive income that is reclassified to profit or loss
(h) tax expense;
(i) a single amount for the total discontinued operations
Information to be presented in the other comprehensive income section
The other comprehensive income section should present line items for the amounts
for the period of:
(a) items of other comprehensive income (excluding amounts in paragraph (b)),
classified by nature and grouped into those that, in accordance with other Ind ASs:
(i) will not be reclassified subsequently to profit or loss; and
(ii) will be reclassified subsequently to profit or loss when specific conditions
are met.
(b) the share of the other comprehensive income of associates and joint ventures
accounted for using the equity method, separated into the share of items that, in
accordance with other Ind ASs:
(i) will not be reclassified subsequently to profit or loss; and
(ii) will be reclassified subsequently to profit or loss when specific conditions
are met.
Additional line items (including by disaggregating the specified line items), headings
and sub totals as may be relevant for an understanding of the entity’s results of
operations should be presented.
No items may be presented in the statement of profit and loss or in the notes as
‘extraordinary items’.
With regard to profit or loss for the period, the Standard requires the recognition of
all items of income and expense in a period in profit or loss unless an Ind AS requires
or permits otherwise.
With regard to other comprehensive income for the period, the Standard requires to
disclose the amount of income tax relating to each item of other comprehensive
income, including reclassification adjustments, either in the statement of profit and
loss or in the notes.
The Standard further prescribes that an entity should disclose reclassification
adjustments relating to components of other comprehensive income.
Information to be presented in the statement of profit and loss or in the
notes
When items of income or expense are material, the same should be disclosed
separately. Circumstances that may require separate disclosure of items of income
and expense may include the following:
 write-downs of inventories to net realisable value or of property, plant and
equipment to recoverable amount, as well as reversals of such write-downs;
 restructurings of the activities of an entity and reversals of any provisions for
the costs of restructuring;
 disposals of items of property, plant and equipment;
 disposals of investments;
 discontinuing operations;
 litigation settlements; and
 other reversals of provisions.
The Standard requires an entity to present an analysis of expenses recognised in
profit or loss using a classification based on the nature of expense method. Entities
are encouraged to present this analysis in the statement of profit and loss.
Statement of Changes in Equity
Ind AS 1 requires an entity to present a statement of changes in equity. The
statement includes the following information:
(a) total comprehensive income for the period, showing separately the total
amounts attributable to owners of the parent and to non controlling
interests;
(b) for each component of equity, the effects of retrospective application or
retrospective restatement recognised in accordance with Ind AS 8;
(c) for each component of equity, a reconciliation between the carrying amount at
the beginning and the end of the period, separately (as a minimum) disclosing each
changes resulting from:
(i) profit or loss;
(ii) other comprehensive income;
(iii) transactions with owners in their capacity as owners, showing separately
contributions by and distributions to owners and changes in ownership interests
in subsidiaries that do not result in a loss of control; and
(iv) any item recognised directly in equity such as amount recognised directly in
equity as capital reserve in accordance with Ind AS 103.

Statement of Cash Flows

An entity should present a statement of cash flows in accordance with Ind AS 7,
Statement of Cash Flows.

Notes
The notes should:
 present information about the basis of preparation of the financial statements
and the specific accounting policies used;
 disclose any information required by Ind ASs that is not presented elsewhere in
the financial statements; and
 provide information that is not presented elsewhere in the financial statements
but is relevant to an understanding of them.
An entity shall present notes in a systematic manner. In determining a systematic
manner, the entity shall consider the effect on the understandability and
comparability of its financial statements. An entity should cross-reference each item
in the financial statements to the related information in the relevant note.

Disclosure of accounting policies

An entity shall disclose its significant accounting policies comprising:
(a) the measurement basis (or bases) used in preparing the financial statements;
and
(b) the other accounting policies used that are relevant to an understanding of the
financial statements.
 An entity must disclose along with its significant accounting policies or other notes,
the judgments, apart from those involving estimations, that management has made
in the process of applying the entity’s accounting policies that have the most
significant effect on the amounts recognised in the financial statements.
An entity must disclose, in the notes, information about the assumptions
made concerning the future, and other important sources of estimation
uncertainty at the end of the reporting period, that have a significant risk of resulting
in a material adjustment to the carrying amounts of assets and liabilities within the
next financial year. Disclosures about nature of such assets and their carrying
amount as at the end of the reporting period should also be made.
Capital Disclosures
An entity should disclose information about its objectives, policies and processes for
managing capital.
Puttable Financial Instruments classified as equity
The following additional disclosures should be made, if not already disclosed
elsewhere in the financial statements, if an entity has a puttable financial instrument
classified as an equity instrument:
 summary quantitative data about the amount classified as equity;
 the entity’s objectives, policies and processes for managing its obligation to
repurchase or redeem the instruments when required to do so by the
instrument holders, including any changes from the previous period;
 the expected cash outflow on redemption or repurchase of that class of
financial instruments; and
 information about how the expected cash outflow on redemption or
repurchase was determined.
Other Disclosures
An entity must disclose the amount of dividends proposed or declared before
the financial statements were approved for issue but not recognised as a
distribution to owners during the period, and the related amount per share and the
amount of any cumulative preference dividends not recognised.
Ind AS 1 requires certain other disclosures, if not disclosed elsewhere in information
published with the financial statements, such as, the domicile and legal form of the
entity, its country of incorporation and the address of its registered office,
a description of the nature of the entity’s operations and its principal
activities, the name of the parent and the ultimate parent of the group, if it
is a limited life entity, information regarding the length of its life.