SME Statement of Comprehensive Income and Income Statement

Last Updated on 12/02/2020 by 75385885

Section 5 SME Statement of Comprehensive Income and Income Statement

Scope of this section

5.1 This section requires an entity to present its total comprehensive income for a period—ie its financial performance for the period—in one or two financial statements. It sets out the information that is to be presented in those statements and how to present it.

Presentation of total comprehensive income

5.2 An entity shall present its total comprehensive income for a period either: Statement of Comprehensive Income and Income Statement

  1. in a single statement of comprehensive income, in which case the statement of comprehensive income presents all items of income and expense recognised in the period; or
  2. in two statements—an income statement and a statement of comprehensive income—in which case the income statement presents all items of income and expense recognised in the period except those that are recognised in total comprehensive income outside of profit or loss as permitted or required by IFRS.

5.3 A change from the single-statement approach to the two-statement approach, or vice versa, is a change in accounting policy to which Section 10 Accounting Policies, Estimates and Errors applies.

Single-statement approach

5.4 Under the single-statement approach, the statement of comprehensive income shall include all items of income and expense recognised in a period unless IFRS in summary requires otherwise. IFRS in summary provides different treatment for the following circumstances: Statement of Comprehensive Income and Income Statement

  1. the effects of corrections of errors and changes in accounting policies are presented as retrospective adjustments of prior periods instead of as part of profit or loss in the period in which they arise (see Section 10); and Statement of Comprehensive Income and Income Statement
  2. four types of other comprehensive income are recognised as part of total comprehensive income, outside of profit or loss, when they arise:
    1. some gains and losses arising on translating the financial statements of a foreign operation (see Section 30 Foreign Currency Translation);
    2. some actuarial gains and losses (see Section 30 Employee Benefits);
    3. some changes in fair values of hedging instruments (see Section 28 Other Financial Instrument Issues); and
    4. changes in the revaluation surplus for property, plant and equipment measured in accordance with the revaluation model (see Section 17 Property, Plant and Equipment).
Something else -   SME Property Plant and Equipment

5.5 As a minimum, an entity shall include, in the statement of comprehensive income, line items that present the following amounts for the period:

  1. revenue. Statement of Comprehensive Income and Income Statement
  2. finance costs. Statement of Comprehensive Income and Income Statement
  3. share of the profit or loss of investments in associates (see Section 14 Investments in Associates) and jointly controlled entities (see Section 15 Investments in Joint Ventures) accounted for using the equity method. Statement of Comprehensive Income and Income Statement
  4. tax expense excluding tax allocated to items (e), (g) and (h) (see paragraph 29.35).
  5. a single amount comprising the total of:
    1. the post-tax profit or loss of a discontinued operation; and
    2. the post-tax gain or loss attributable to an impairment, or reversal of an impairment, of the assets in the discontinued operation (see Section 27 Impairment of Assets), both at the time and subsequent to being classified as a discontinued operation and to the disposal of the net assets constituting the discontinued operation.
  6. profit or loss (if an entity has no items of other comprehensive income, this line need not be presented).
  7. each item of other comprehensive income (see paragraph 5.4(b)) classified by nature (excluding amounts in (h)). Such items shall be grouped into those that, in accordance with IFRS in summary: Statement of Comprehensive Income and Income Statement
    1. will not be reclassified subsequently to profit or loss—ie those in paragraph 5.4(b)(i) – (ii) and (iv); and
    2. will be reclassified subsequently to profit or loss when specific conditions are met—ie those in paragraph 5.4(b)(iii).
  8. share of the other comprehensive income of associates and jointly controlled entities accounted for by the equity method.
  9. total comprehensive income (if an entity has no items of other comprehensive income,it may use another term for this line such as profit or loss).
Something else -   SME Investment Property

5.6 An entity shall disclose separately the following items in the statement of  comprehensive income as allocations for the period:

  1. profit or loss for the period attributable to Statement of Comprehensive Income and Income Statement
    1. non-controlling interest; and Statement of Comprehensive Income and Income Statement
    2. owners of the parent. Statement of Comprehensive Income and Income Statement
  2. total comprehensive income for the period attributable to
    1. non-controlling interest; and Statement of Comprehensive Income and Income Statement
    2. owners of the parent. Statement of Comprehensive Income and Income Statement

Two-statement approach

5.7 Under the two-statement approach, the income statement shall display, as a minimum, line items that present the amounts in paragraph 5.5(a)–5.5(f) for the period, with profit or loss as the last line. The statement of comprehensive income shall begin with profit or loss as its first line and shall display, as a minimum, line items that present the amounts in paragraph 5.5(g)–5.5(i) and
paragraph 5.6 for the period.

Requirements applicable to both approaches

5.8 Under IFRS in summary, the effects of corrections of errors and changes in accounting policies are presented as retrospective adjustments of prior periods instead of as part of profit or loss in the period in which they arise (see Section 10). Statement of Comprehensive Income and Income Statement

5.9 An entity shall present additional line items, headings and subtotals in the statement of comprehensive income (and in the income statement, if presented), when such presentation is relevant to an understanding of the entity’s financial performance. Statement of Comprehensive Income and Income Statement

5.10 An entity shall not present or describe any items of income and expense as ‘extraordinary items’ in the statement of comprehensive income (or in the income statement, if presented) or in the notes. Statement of Comprehensive Income and Income Statement

Analysis of expenses

5.11 An entity shall present an analysis of expenses using a classification based on either the nature of expenses or the function of expenses within the entity, whichever provides information that is reliable and more relevant. Statement of Comprehensive Income and Income Statement

Analysis by nature of expense

(a) Under this method of classification, expenses are aggregated in the statement of comprehensive income according to their nature (for example, depreciation, purchases of materials, transport costs, employee benefits and advertising costs) and are not reallocated among various functions within the entity.

Something else -   SME Financial Statement Presentation

Analysis by function of expense

(b) Under this method of classification, expenses are aggregated according to their function as part of cost of sales or, for example, the costs of distribution or administrative activities. At a minimum, an entity discloses its cost of sales under this method separately from other expenses.

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Last Updated on 12/02/2020 by 75385885

Excerpts from IFRS Standards come from the Official Journal of the European Union (© European Union, https://eur-lex.europa.eu). Individual jurisdictions around the world may require or permit the use of (locally authorised and/or amended) IFRS Standards for all or some publicly listed companies.  The information provided on this website is for general information and educational purposes only and should not be used as a substitute for professional advice. The specific status of IFRS Standards should be checked in each individual jurisdiction. Use at your own risk. Annualreporting is an independent website and it is not affiliated with, endorsed by, or in any other way associated with the IFRS Foundation. For official information concerning IFRS Standards, visit IFRS.org or the local representative in your jurisdiction.

Something else -   Low probability of an inflow or outflow of economic benefits