DipIFRS ACCA course - IAS1 Presentation of Financial Statements No.16

DipIFRS ACCA course - IAS1 Presentation of Financial Statements No.16

Statement of financial position (balance sheet):

The components of the balance sheet are classified into
Current and non-current classification:
An enterprise must usually provide a classified list of the financial position that separates:
1. Current and non-current assets.
2. Current and non-current liabilities.
Unless the liquidity-based presentation provides reliable information.
If the asset class (liability) combines the amounts that will be received (settled) after 12 months with the assets (liabilities) that will be received (settled) within 12 months, then the note separating the long-term amounts from the 12-month amounts must be disclosed.

Current assets are:

1. It is expected to be realized in the entity's normal operating cycle.
the date from the initial cash outlay (purchasing of raw material) to the date of cash receipt from the customer.
2. held primarily for the purpose of trading.
3. Expected to be achieved within 12 months after the reporting period.

Realized is intended to convert it into:
1. Cash
2. Cash equivalents

All other assets are non-current.

Current liabilities are obligations:

This is expected to be settled within the entity's normal operating cycle.
1. Held for purpose of trading.
2. To be settled within 12 months.
The entity shall not, at the end of the reporting period, delay the settlement until after 12 months.

Other liabilities are non-current.

Note that

When a long-term debt is expected to be refinanced under an existing loan facility and the entity has the discretion to do so the debt is classified as non-current even if the obligation is due within 12 months

If the obligation becomes payable on demand because the entity has violated an obligation under a long-term loan agreement on or before the reporting date .. the obligation is current .. even if the lender agreed after the reporting date and before authorizing the issuance of the financial statements and not to demand payment as a result For violation.

However a liability is classified as non-current if, by the reporting date, the lender agrees to introduce a grace period ending at least 12 months after the end of the reporting period during which the entity can correct the violation and accordingly the lender cannot claim immediate repayment.

if a non-current liability is classified into a current liability, the company's liquidity ratios will be affected by the negative !!

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