Join Your Exam WhatsApp group to get regular news, updates & study materials HOW TO JOIN

IFRS Statement of changes inequity And IFRS

IFRS Statement of changes inequity

IFRS Statement of changes inequity:The IFRS for SMEs is intended to apply to the general purpose financial statements of entities that do not have public accountability (see Section 1 Small and Medium-sized Entities). The IFRS for SMEs includes mandatory requirements and other material (non-mandatory) that is published with it. The material that is not mandatory includes:

  • a preface, which provides a general introduction to the IFRS for SMEs and explains its purpose, structure and authority.
  • implementation guidance that includes illustrative financial statements and a disclosure checklist.
  • the Basis for Conclusions, which summarises the IASB’s main considerations in reaching its conclusions in the IFRS for SMEs.
  • the dissenting opinion of an IASB member who did not agree with the publication of the IFRS for SMEs. In the IFRS for SMEs the Glossary is part of the mandatory requirements.

In the IFRS for SMEs there are appendices in Section 21 Provisions and Contingencies, Section 22 Liabilities and Equity and Section 23 Revenue. Those appendices are non-mandatory guidance. Further, the SME Implementation Group (SMEIG), responsible for assisting the IASB on matters related to the implementation of the IFRS for SMEs, published implementation guidance in the form of questions and answers (Q&As).

The Q&As are intended to provide non-mandatory and timely guidance on specific accounting questions that are being raised with the SMEIG by users implementing the IFRS for SMEs. When the IFRS for SMEs was issued in July 2009, the IASB undertook to assess entities’ experience of applying the IFRS for SMEs following the first two years of application and consider whether there is a need for any amendments. To this end, in June 2012, the IASB issued a Request for Information: Comprehensive Review of the IFRS for SMEs. Currently it is expected that an exposure draft proposing amendments to the IFRS for SMEs will be issued in the first half of 2013.

IFRS Statement of changes inequity

The objective of general purpose financial statements of a small or medium-sized entity is to provide information about the entity’s financial position, performance and cash flows that is useful for economic decision-making by a broad range of users (eg owners who are not involved in managing the business, potential owners, existing and potential lenders and other creditors) who are not in a position to demand reports tailored to meet their particular information needs. Section 3 Financial Statement Presentation prescribes general requirements for the presentation of financial statements. Section 6 specifies line items to be presented in the statement of changes in equity and the statement of income and retained earnings and provides mandatory guidance on the sequencing of items and the level of aggregation.

IFRS Statement of changes inequity

A statement of changes in equity reflects all changes in equity between the beginning and the end of the reporting period arising from transactions with owners in their capacity as owners (ie owner changes in equity) reflecting the increase or decrease in net assets in the period. This statement provides a linkage between the entity’s statement of financial position and its statement of comprehensive income.

The statement of changes in equity presents the user with information about each component of equity, including:

  • a reconciliation between the carrying amount at the beginning and the end of the period of each component of equity;
  • the effects of retrospective application of accounting policies; and
  • the effects of retrospective restatement of prior period errors.

The consolidated statement of changes in equity (of a group that includes one or more partly-owned subsidiaries) also provides information about the share of equity attributable to the owners of the parent and that attributable to the non-controlling interests and information about changes in such interests.

IFRS Statement of changes inequity

SIGNIFICANT ESTIMATES AND OTHER JUDGEMENTS

Applying the requirements of the IFRS for SMEs to transactions and events often requires judgement. Information about significant judgements and key sources of estimation uncertainty are useful in assessing the financial position, performance and cash flows of an entity.

Consequently, in accordance with paragraph 8.6, an entity must disclose the judgements that management has made in the process of applying the entity’s accounting policies and that have the most significant effect on the amounts recognised in the financial statements. Furthermore, in accordance with paragraph 8.7, an entity must disclose information about the key assumptions concerning the future, and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year. Other sections of the IFRS for SMEs require disclosure of information about particular judgements and estimation uncertainties. Statement of changes in equity In many cases little difficulty is encountered in presenting the statement of changes in equity in accordance with the IFRS for SMEs.

IFRS Statement of changes inequity

However, in some cases significant judgement is required:

  • to assess which additional line items, headings and subtotals are relevant to an understanding of the entity’s statement of changes in equity
  • in determining whether some financial instruments issued by the entity are classified as equity or liabilities (see Section 22 Liabilities and Equity). Only if the instrument issued is classified as equity would the issue of the instrument be presented directly in the statement of changes in equity. Statement of income and retained earnings
  • In many cases little difficulty is encountered in presenting the statement of income and retained earnings in accordance with the IFRS for SMEs. However, in some cases significant judgement is required. For example, judgement is required:
  • to assess which additional line items, headings and subtotals are relevant to an understanding of the entity’s statement of income and retained earnings
  • to identify discontinued operations and segregate their post-tax profit or loss from the income and expenses of continuing operations
  • to assess which classification of expenses (by function or by nature) provides information that is reliable and more relevant
  • to classify certain expenses by function (eg the allocation of expenses that relate to more than one function of the entity)
  • to classify certain expenses by nature (eg to separate the components of certain expenses that include items that are different in nature).

IFRS Statement of changes inequity

Cakart.in provides India’s top IFRS faculty video classes – online & in Pen Drive/ DVD – at very cost effective rates. Get IFRS Video classes from www.cakart.in  to do a great preparation for primary Student.

Watch IFRS sample video lectures visit www.cakart.in
Watch  IFRS  sample lecture books   visit www.cakart.in
Watch IFRS free downloads   visit www.cakart.in

Leave a comment

Your email address will not be published. Required fields are marked *