4.1 Presentation of Financial Statements
There are many similarities between financial statement presentation
under IFRS Accounting Standards and U.S. GAAP, although there are more requirements
under IFRS Accounting Standards governing line items and comparative information than
under U.S. GAAP. Specific presentation of particular financial statement line items is
required by individual accounting guidance and SEC rules and regulations under U.S.
GAAP. Under IFRS Accounting Standards, particular financial statement line items and one
year of comparative financial information are required, with certain exceptions. While
there is no requirement to present comparative financial information under U.S. GAAP,
SEC regulations require comparative financial information for public registrants. Under
both IFRS Accounting Standards and U.S. GAAP, a complete set of financial statements
consists of the following: a statement of financial position, a statement of profit or
loss and OCI, a statement of cash flows, a statement of changes in shareholders’ equity,
and accompanying notes. The table below shows the key differences between the
presentation of financial statements under IFRS Accounting Standards and under U.S.
GAAP. Other differences that affect the presentation of financial statements are
included in Section 4.4,
which discusses changes in accounting principles, changes in accounting estimates, and
error corrections.
Topic
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IFRS Accounting Standards (IAS 1)
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U.S. GAAP (ASC 205-10, ASC 220-10, ASC 470-10,
ASC 505-10, ASC 810-10) and SEC Regulation S-X
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Comparative financial statements
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An entity must provide one year of comparative
financial information.
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No specific requirement under U.S. GAAP to
present comparative financial statements. Generally, at least
one year of comparative financial information is presented.
Public companies are subject to SEC rules and regulations, which
usually require two years of comparative financial information
for the income statement and the statements of equity and cash
flows.
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Debt classification — subsequent events
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Events that take place after the reporting date
(refinancing, covenant violation waiver, and so forth) are
generally not considered in the classification of debt as of the
reporting date.
A short-term obligation is classified as current even if the
debtor refinances it on a long-term basis (or a long-term
financing arrangement is executed) after the balance sheet
date.
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Events that take place after the reporting date
(refinancing, covenant violation waiver, and so forth) are
generally considered in the classification of debt as of the
reporting date.
A short-term obligation is classified as noncurrent if it is
refinanced on a long-term basis (or a long-term financing
arrangement is in place) by the time the financial statements
are issued (or available to be issued).
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Debt classification — violation of loan covenants as of the
reporting date whereby a long-term loan becomes payable on
demand
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Debt is classified as a current liability.
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Such debt is classified as a noncurrent liability if the lender
provides a qualifying covenant waiver before the financial
statements are issued.
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Classification — expenses
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An entity may present its expenses either by function or nature.
Certain disclosures are required if the entity chooses to
present the expenses by function.
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An entity may present its income statement in (1) a single-step
format (all expenses are classified by function and deducted
from total income to arrive at income before tax) or (2) a
multiple-step format (operating and nonoperating expenses are
separated before presenting income before tax).
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