The IASB has issued a revised IAS 1 ‘Presentation of Financial Statements’.
The main changes from the previous version are to require that an entity must:
- Present all non-owner changes in equity (that is, ‘comprehensive income’ – see box below) either in one statement of comprehensive income or in two statements (a separate income statement and a statement of comprehensive income). Components of comprehensive income may not be presented in the statement of changes in equity.
- Present a statement of financial position (balance sheet) as at the beginning of the earliest comparative period in a complete set of financial statements when the entity applies an accounting policy retrospectively or makes a retrospective restatement.
- Disclose income tax relating to each component of other comprehensive income.
- Disclose reclassification adjustments relating to components of other comprehensive income.
IAS 1 changes the titles of financial statements as they will be used in IFRSs:
- ‘balance sheet’ will become ‘statement of financial position’
- ‘income statement’ will become ‘statement of comprehensive income’
- ‘cash flow statement’ will become ‘statement of cash flows’).
The revised IAS 1 is effective for annual periods beginning on or after 1 January 2009. Early adoption is permitted. Click for Press Release (PDF 17k).
Comprehensive income for a period includes profit or loss for that period plus other comprehensive income recognised in that period. The components of other comprehensive income include:
- changes in revaluation surplus (IAS 16 and IAS 38).
- actuarial gains and losses on defined benefit plans recognised in accordance with paragraph 93A of IAS 19.
- gains and losses arising from translating the financial statements of a foreign operation (IAS 21).
- gains and losses on remeasuring available-for-sale financial assets (IAS 39).
- the effective portion of gains and losses on hedging instruments in a cash flow hedge (IAS 39).