Reporting-Group-8.pptxdsfdffdfsafawsefwfff

reporting of ifrs

1. Presented by : Group 08 PRESENTED TO: Sujan Chandra Paul FCA ASSOCIATE PROFESSOR DEPARTMENT OF ACCOUNTING & ACCOUNTING & INFORMATION SYSTEMS UNIVERSITY OF BARISHAL

2. 01 02 03 04 Zikrul Ahsan Walid. 20 AIS 059 Neksi Chakma. 21 AIS 077 Ummey Salma Pushpo . 2o AIS 074 Ema Afrin Sithi . 20 AIS 009 05 Ahsanul Kabir . 20 AIS 071 06 Mostafa al Hossain. 21 AIS 055 07 Rashel Sheikh . 21 AIS 026 Our Team Members Sadiya Jahan Tisha . 21 AIS 049 08

3. Zikrul Ahsan Walid 20 AIS 059

4. History of IAS 1 and IFRS 1

5. OBJECTIVES 01 05 04 02 03 Transparency and Comparability Helping for Decisions Making Establishing Framework Minimum Disclosure Requirements Define Key Financial Statements 6

6. SCOPE 01 05 04 02 03 Purpose Going Concern General Guidelines Disclosure Requirements Consistency 7

7. Neksi Chakma 21 AIS 077

8. Purpose of Financial Statements General Purpose Financial Statement Financial statements are those intended to meet the needs of users who are not in a position to require an entity to prepare reports tailored to their particular information needs

9. Purpose of Financial Statements General Purpose Financial Statement International Financial Reporting Standards (IFRSs) are Standards and Interpretations adopted by the International Accounting Standards Board (IASB). They comprise: International Financial Reporting Standards. International Accounting Standards . International Financial Reporting Interpretations Committee (IFRIC) .

10. Assets 02 04 01 Liabilities Equity 03 Income and expenses, including gains and losses Contributions by and distributions to owners 05 Cash flows 06 Purpose of financial statements

11. Components of Financial Statements Statement of Financial position Statement of profit or loss and other comprehensive income Notes Statement of cash flow 01 02 04 05 Statement of change in equity 03

12. Statement of Financial position is a formal statement showing three elements comprising financial position, namely assets, liabilities, and equity. - users analyze the statement of financial position to evaluate such factors as liquidity, solvency, and the need of the entity for additional financing.

13. Elements of Statement of Financial Position 01. Asset - present economic resource -controlled by entity as result of past events 02. Liability - present obligation - to transfer economic resource - obligation is a result of past events 03. Equity - residual interest

14. Statement of Profit or Loss and Other Comprehensive Income -is a formal statement showing the financial performance of an entity for a given period of time. •Service perform services for a fee. •Merchandising - selling of finished product by other businesses. •Manufacturing - involved in conversion of raw materials into some tangible, physical product.

15. Statement of Profit or Loss and Other Comprehensive Income Presentation Profit or loss Other comprehensive Income Two statement Income statement Statement of comprehensive income Single statement Statement of financial statement Statement of Changes in Equity - refers to the reconciliation of the opening and closing balances of equity in a company during a particular period.

16. Legal Forms of Business 01. Sole Proprietorship -single owner operates the business 02. Partnership -owned by two or more individuals with the intention of dividing profits among themselves 03. Corporation - artificial being created by law

17. Elements of Changes in Equity 01. Contribution by Owners -increase to equity resulting from asset investment 03. Distribution to Owners -decrease to equity resulting from distribution of asset

18. Statement of Cash Flow Cash Flow is a component of financial statements summarizing the operating, investing, and financing activities of an entity •cash receipts •Cash payments

19. Elements of Statement of Cash Flow 01. Operating Activities - current assets - nominal accounts - current liabilities - current asset 02. Investing Activities -current liabilities - noncurrent liabilities 03. Financing Activities - equity - noncurrent liabilities

20. Notes to Financial Statements - provide narrative description or disaggregation of items presented in the financial statements and information about items that do not qualify for recognition. Presents Non-Financial Information Financial Information Necessary Disclosures a. Summary of compliance with BFRS b. Summary of significant accounting policy used c. Supporting information or computation for line items presented in the financial statements. d. Other disclosures

21. Ahsanul Kabir 20 AIS 071

22. Consistency of Presentation Going Concern Accural Basis of Accounting Fair Presentation 01 02 03 04 Ahsanul Kabir

23. Ema Afrin Sithi 20 AIS 009

24. Calculating Net Profit and Total Comprehensive Income According to IAS-1 A company reports the following financial data for the year: Revenue = $500,000 Cost of Sales = $200,000 Gross Profit = Revenue - Cost of Sales = $500,000 - $200,000 = $300,000 Operating Expenses = $50,000 Finance Costs = $20,000 Tax Expense = $40,000 Calculate Profit for the Year (Net Profit): Net Profit = Gross Profit - Operating Expenses - Finance Costs - Tax Expense = 300,000 - 50,000 - 20,000 - 40,000 = 190,000

25. Calculate Total Comprehensive Income: If the company has Other Comprehensive Income (OCI) of $10,000 (from a revaluation surplus): Total Comprehensive Income = Net Profit + Other Comprehensive Income = 190,000 + 10,000 = 200,000

26. Presentation in Financial Statements According to IAS 1, these figures would be presented as follows: Statement of Profit or Loss and Other Comprehensive Income Revenue: $500,000 Cost of Sales: ($200,000) Gross Profit: $300,000 Operating Expenses: ($50,000) Finance Costs: ($20,000) Profit Before Tax: $230,000 Tax Expense: ($40,000) Net Profit for the Year: $190,000 Other Comprehensive Income: $10,000 Total Comprehensive Income: $200,000

27. Disclosure 1 3 6 General Requirements for Financial Statements Statement of Profit or Loss and Other Comprehensive Income Notes to Financial Statements 28 2 Statement of Financial Position (Balance Sheet) 4 Statement of Changes in Equity 5 Statement of Cash Flows

28. Disclosure 7 9 Comparative Information Materiality 29 8 Disclosure of Non-Current Assets and Liabilities 10 Changes in Accounting Policies or Estimates 11 Segment Reporting (if applicable)

29. Ummey Salma Pushpo 2o AIS 074

30. Objective of IFRS I 1.Ease of transition 2.Comparability 3.Transparency 4.Prior period Restatement

31. Requirements Opening IFRS Balance sheet Full Retrospective Application Disclosure Requirements Choice of Accounting Policies Exemption and Exception 02 05 04 01 03 First time Adoption Date 06

32. Rashel Shaikh 21 AIS 026

33. Exemptions and Exceptions in IFRS 1 – First-time Adoption of IFRS 1 No need to restate past business combinations before the transition date. 34 2 Allows avoiding retrospective adjustments on contingent liabilities, non-controlling interests, and acquisition costs. 1. Optional Exemptions These exemptions help ease the transition to IFRS by allowing companies to avoid full retrospective application in specific areas. A. Business Combinations (IFRS 3)

34. 1 Can use fair value or previous GAAP revaluation as deemed cost for property, plant, equipment, intangible assets, and investment property. 35 1 Reset cumulative translation differences for foreign operations to zero at transition, simplifying future translation adjustments. B. Fair Value or Revaluation as Deemed Cost C. Employee Benefits (IAS 19) 1 Option to recognize all cumulative actuarial gains/losses at transition date, avoiding retrospective application of the corridor approach. D. Translation Differences (IAS 21)

35. 1 No need to apply IFRS 2 to equity instruments granted before IFRS adoption 36 1 Simplified transition reliefs for lessees, such as no restatement of comparative periods or exemptions for low-value leases. E. Share-Based Payment (IFRS 2) F. Compound Financial Instruments (IAS 32) 1 No need to retrospectively separate equity and liability components of convertible bonds or similar instruments. G. Leases (IFRS 16)

36. 1 Only capitalizing borrowing costs incurred after the transition date. 37 H. Borrowing Costs (IAS 23) I. Insurance Contracts (IFRS 4) 1 Can continue using previous accounting policies for insurance contracts before IFRS 17

37. 1 No change to previous GAAP estimates unless there’s objective evidence, they were incorrect. 38 2. Mandatory Exceptions These exceptions must be applied and prevent retrospective application in certain areas. A. Estimates B. Derecognition of Financial Instruments (IFRS 9/IAS 39) 1 No retrospective recognition or derecognition of financial assets or liabilities already derecognized under previous GAAP.

38. 1 Hedge accounting only if IFRS 9 or IAS 39 criteria were met at the transition date. No retrospective application. 39 C. Hedge Accounting D. Non-controlling Interests (IFRS 10) 1 Past transactions affecting non-controlling interests are not restated. Apply control concept based on transition date.

39. 1 Classify and measure financial instruments based on transition date conditions, not retrospectively. 40 E. Classification and Measurement of Financial Instruments (IFRS 9) F. Embedded Derivatives 1 Assess embedded derivatives only based on conditions at the transition date

40. Mostafa al Hossain 21 AIS 055

41. First-Time Adoption of IFRS Reconciliation: A Structured Overview 1 Key Steps in IFRS Transition: •Opening IFRS Statement of Financial Position: Prepared at the transition date, serving as the starting point under IFRS. 42 •Transition Date: The start of the earliest period for which comparative IFRS information is provided. •Application of IFRS Policies: Retrospective application with exceptions/exemptions per IFRS 1. When a company transitions from local GAAP to International Financial Reporting Standards (IFRS), it must provide reconciliations to explain the impact of the transition. Here’s a structured breakdown of the process and requirements:

42. 2 Mandatory Reconciliations: At the transition date 43 •Equity Reconciliation : At the end of the latest period under previous GAAP •Comprehensive Income Reconciliation: For the latest GAAP period to IFRS.

43. 3 Disclosure Requirements: •Exemptions and Exceptions: 44 •Nature and Impact of Adjustments: Detailed explanations of material differences between GAAP and IFRS, including quantitative effects. Optional Exemptions: E.g., business combinations, fair value as deemed cost. Disclose exemptions used and their effects. Mandatory Exceptions: Prohibited retrospective application (e.g., hedge accounting, estimates).

44. 4 Common Adjustments: •Leases: Reclassification from operating to finance leases. 45 •Asset Revaluations: PPE, intangibles (capitalized vs. expensed). •Revenue Recognition: Timing differences (e.g., percentage-of-completion vs. completed contract). •Deferred Taxes: Adjustments due to temporary differences. •Provisions and Impairments: Recognition criteria and measurement changes.

45. 5 Presentation in Financial Statements: 46 •First IFRS Financial Statements: Include at least one comparative period restated under IFRS. •Notes to Financial Statements: Reconciliations and disclosures are part of the notes, not a restatement of prior GAAP financials

46. 47 Particulars Local GAAP (Jan 1, 2023) IFRS Adjustments IFRS (Jan 1, 2023) Share Capital 500,000 — 500,000 Retained Earnings 300,000 50,000 350,000 Revaluation Reserve 20,000 (20,000) — Deferred Tax Impact — (10,000) (10,000) Total Equity 820,000 20,000 840,000 Example: IFRS Reconciliation for First-Time Adoption 1. Reconciliation of Equity Assume that on January 1, 2023 (transition date), a company has the following equity under local GAAP:

47. 48 2. Reconciliation of Total Comprehensive Income For the year ended December 31, 2023, the company’s total comprehensive income reconciliation is: Particulars Local GAAP (2023) IFRS Adjustments IFRS (2023) Net Profit 120,000 30,000 150,000 Revaluation Gain 10,000 (10,000) — Depreciation Impact — (5,000) (5,000) Deferred Tax Impact — (2,000) (2,000) Total Comprehensive Income 130,000 13,000 143,000

48. 3 Explanation of IFRS Adjustments O Under local GAAP, PPE was revalued upward by $20,000. O IFRS does not allow this unless using the revaluation model consistently. O The adjustment removes $20,000 from the revaluation reserve. 49 •Property, Plant & Equipment (PPE) Revaluation:

49. O IFRS requires component-wise depreciation, which increased depreciation expense by $5,000. 50 •Depreciation Impact: O Due to temporary differences, deferred tax liability increased by $10,000 at the transition date. •Deferred Tax Adjustment: O IFRS 15 (Revenue from Contracts with Customers) led to an increase of $30,000 in revenue. •Recognition of Additional Revenue:

50. Sadiya Jahan Tisha 21 AIS 049

51. Transition Process. 02 04 01 Retrospective Application. Guidance 03 Benefits First-time adaptation of IFRS Existing IFRS Subsidiary- First-time Adoption of IFRS (IFRS 1):

52. Compliance Status. 02 01 No Transition Requirement. Consistency. 03 When existing IFRS Subsidiary:

53. Analysis & Reconciliation 02 01 Restatement of Financial Data Transitional Adjustments & Exemptions 03 First time adaptation of GPRS-Common implementation issues- Enhanced Disclosure Requirements 04 Systematic & Process Updates 05 Discloser *

54. Do You Have Any Questions?