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DipIFRS ACCA course - IAS1 statement of profit or loss and other comprehensive income No.19

DipIFRS ACCA course - IAS1 statement of profit or loss and other comprehensive income No.19

Concepts of profit or loss and comprehensive income:

It is defined:

1. Profit.

2. Loss.

As Total income minus expenses, excluding the components of other comprehensive income


Other comprehensive income is defined as including:

Items of income and expenses (including reclassification adjustments) that are not recognized in profit or loss as required or permitted by other IFRSs


Total comprehensive income is defined as:

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.


Comprehensive income for the period = Profit or loss + Other comprehensive income


All items of income and expenses recognized in a period should be included in profit or loss unless the standard or interpretation requires otherwise.

Some IFRSs require or allow certain components to be excluded from profit or loss and are instead included in other comprehensive income.


Examples of items recognized outside of profit or loss:


1. Changes in revaluation surplus:

Where the revaluation method is used under IAS 16 property, plant and equipment and IAS 38 re-measurement of intangible assets of the net defined benefit obligation or recognized asset in accordance with IAS 19 employee benefits.


The reason for taking the profits or losses out of the revaluation outside the statement of profits and losses is that the profits are not greatly maximized and thus the demand for dividends ... that has not been realized and is not expected to be realized 

For example, 

the revaluation of the land on which the company’s factory was established on which the gain from re-investment. the evaluation has not been achieved, nor is it expected to happen, "the land will not be sold !!"


2. Exchange differences from translating functional currencies into presentation currency:

In accordance with IAS 21, the effects of changes in foreign exchange rates, gains and losses on re-measurement of financial assets available for sale in accordance with IAS 39 Financial Instruments: Recognition and measurement of the effective portion of profits and losses on hedging instruments in hedging cash flows under IAS 39 or IFRS 9 - Profits and losses from re-measurement of investment in equity instruments where the entity has chosen to present it in other comprehensive income in accordance with IFRS 9 - Effects of changes in credit risk for a financial liability are designated at fair value through profit and loss under IFRS 9.


In addition, IAS 8 accounting policies, changes in accounting estimates and errors, require corrections of errors and recognition of the effect of changes in accounting policies outside of profit or loss for the current period.



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