![]() ![]() Monetary assets represent cash or claims to future cash flows that are fixed and determinable in amounts and timing. Let’s review some important concepts before looking at specific accounts:Īsset is a resource with economic value that a company owns or controls with the expectation that it will provide a future benefit.Ĭurrent assets are those assets that are converted into cash within the operating cycle or one year, whichever is longer. These will be discussed in more detail in the chapters that follow in the next intermediate accounting course. The required supplemental disclosures below focus on the measurement basis of the various assets, the due dates, interest rates, and security conditions for non-current liabilities and the structure for each class of share capital in shareholders’ equity when preparing a SFP/BS. The focus is mainly IFRS for simplicity, though ASPE is substantially similar. Cross-reference note disclosures to the related line items in the statement.īelow are the basic classifications for some of the more common reporting line items and accounts.Due dates and interest rates for any financial instruments payable such as loans, notes, mortgages, and bonds payable, as well as details about any security required for the loan are to be disclosed.Examples would be whether the company applied fair value, fair value less costs to sell, cost, amortized cost, net realizable value, or lower of cost and net realizable value (LCNRV) when preparing the statement. The measurement basis used for each line item in the statement is to be disclosed.Some companies further report assets in order of their liquidity. Assets and liabilities are to be separated into current and non-current (long-term).When preparing the SFP/BS, assets are not to be netted with liabilities.In addition, any material classes of similar items are to be separately disclosed in either the statement or in the notes to the financial statements (e.g., items of property, plant, and equipment, types of inventories, or classes of equity share capital). The schedule below lists many of the more common assets and liabilities that are to be separately reported. The SFP/BS is to report assets and liabilities separately in many cases.Company name, name of the financial statement, and date must be provided.Any material uncertainties about a company’s ability to continue as a going concern are to be disclosed.Faithfully representative means that the statement is complete, neutral, and free from errors. Relevance means that the information in the SFP/BS can make a difference in decision-making. The application of the standards is required, with additional disclosures when necessary, so that the SFP/BS will be relevant and faithfully representative.Listed below are summary points for some of the more commonly required disclosures for both standards: IFRS (IAS 1) and ASPE (section 1521) identify the disclosure requirements for SFP/BS, which are quite similar. Financial flexibility considers the ability of a company to take effective actions to alter the amounts and timing of cash flows so it can respond to unexpected needs and opportunities. Liquidity and solvency therefore impact the financial flexibility of a company. Solvency reflects an enterprises ability to pay its debt and associated interest. Liquidity depends on the amount of time that is expected to pass until an asset is converted to cash or until a liability has to be paid. ![]() The statement of financial position is useful for analyzing a company’s liquidity, solvency and financial flexibility. This financial statement thus becomes a way for calculating rates of returns on invested assets and for evaluating a business’ capital structure. The statement of financial position (balance sheet under ASPE), reports a businesses assets, liabilities and shareholders’ equity at a specific date (at a point in time). Assets and liabilities come from several sources and are usually separated into current and non-current (IFRS) or long-term (ASPE) categories. ![]() The purpose of the Statement of Financial Position/Balance Sheet (SFP/BS) is to report the assets of a company and the composition of the claims against those assets by creditors and investors at a specific point in time. 4.2 Statement of Financial Position/Balance Sheet ![]()
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