Indian Accounting Standard 1, Presentation of Financial Statements
Ind AS 1 prescribes the basis for presentation of general purpose financial statements 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.
Complete set of financial statements
A complete set of financial statements, which should be presented, including comparatives, at least annually consists of:
(a) a balance sheet as at the end of the period;
(b) a statement of profit and loss for the period;
(c) a statement of changes in equity for the period;
(d) a statement of cash flows for the period;
(e) notes, comprising significant accounting policies and other explanatory information;
(f) comparative information in respect of the preceding period.
An entity shall prepare a third balance sheet as at the beginning of the previous year along with the requirements of comparative information for the year if, it retrospectively applies accounting policies, retrospectively restates items in financial statements, or reclassifies items in financial statements.
General features of financial statements
- present true and fair presentation and compliance with Ind AS.
- prepare financial statements 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.
- prepare using the accrual basis of accounting, except for cash flow information.
- present separately each material class of similar items.
- present separately items of a dissimilar nature or function unless they are immaterial except when required by law.
- shall not offset assets and liabilities or income and expenses, unless required or permitted by an Ind AS.
- present comparative information in respect of the preceding period for all amounts reported in the current period’s financial statements.
- shall retain the presentation and classification of items in the financial statements from one period to the next unless:
- it is apparent, following a significant change in the nature of the entity’s operations or a review of its financial statements, that another presentation or classification would be more appropriate; or
- an Ind AS requires a change in presentation.
An entity whose financial statements comply with Ind ASs should make an explicit and unreserved statement of such compliance in the notes. An entity should not describe financial statements as complying with Ind ASs unless they comply with all the requirements of Ind ASs.
Structure and content
Ind AS 1 does not provide a format for presenting financial statements; however it provides line items to be presented, if they are material, in the balance sheet, statement of profit and loss and statement of changes in equity. The format of presentation of financial statements is provided in Schedule III to the Companies Act, 2013.
The balance sheet shall include line items that present the following amounts:
(i) In respect of equity: Issued capital and reserves attributable to owners of the parent and non-controlling interests
(ii) In respect of assets: Property, plant and equipment; investment property; intangible assets; financial assets; investments accounted for using the equity method; biological assets; inventories; trade and other receivables; cash and cash equivalents; current tax assets; deferred tax assets.
(iii) In respect of liabilities: trade and other payables; provisions; financial liabilities; current tax liabilities; deferred tax liabilities.
(iv) In respect of assets and liabilities held for sale: total of assets classified as held for sale and assets included in disposal groups classified as held for sale; and liabilities included in disposal groups classified as held for sale in accordance with Ind AS 105 Non-current Assets Held for Sale and Discontinued Operations.
An entity should classify all the assets and liabilities as current and non-current in its balance sheet except when a presentation based on liquidity provides information that is reliable and more relevant.
|Current Asset||Current Liability|
|An entity shall classify all other assets as non-current.||
Statement of Profit and Loss
The statement of profit and loss should 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.
Other comprehensive income comprises items of income and expense (including reclassification adjustments*) that are not recognised in profit or loss as required or permitted by other Ind ASs.
Total comprehensive income is the change in equity during a period resulting from transactions and other events, other than those changes resulting from transactions with owners in their capacity as owners.
Total Comprehensive Income = Profit or Loss + Other Comprehensive Income
*Reclassification adjustments are amounts reclassified to profit or loss in the current period that were recognised in other comprehensive income in the current or previous periods.
Any items of income or expense as extraordinary items shall not be presented in the statement of profit and loss or in the notes. An analysis of expenses recognised in profit or loss shall be presented using a classification based on the nature of expense method.
An entity shall present additional line items, headings and subtotals in the balance sheet and statement of profit and loss when such presentation is relevant to an understanding of the entity’s financial position and performance.
Statement of changes in equity
The statement of changes in equity 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 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, Business Combinations.
Information to be presented in the statement of changes in equity or in the notes
An entity shall present, either in the statement of changes in equity or in the notes:
- the amount of dividends recognised as distributions to owners during the period, and the related amount of dividends per share; and
- for each component of equity, an analysis of other comprehensive income by item.
Statement of cash flows
The statement of cash flows should be presented as per Ind AS 7, Statement of Cash Flows.
Notes to the financial statements
The notes shall present information about the basis of preparation of the financial statements and the specific accounting policies used; disclose the 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 any of them.
An entity shall disclose its significant accounting policies comprising the measurement basis (or bases) used in preparing the financial statements; and the other accounting policies used that are relevant to an understanding of the financial statements.
Notes also includes information about the assumptions that an entity makes about the future, and other major sources of estimation uncertainty at the end of the reporting period, disclosures on capital and puttable financial instruments classified as equity.