Primary Financial Statements

Date recorded:

Cover paper and summary of redeliberations (Agenda Paper 21)

In December 2019, the IASB published Exposure Draft ED/2019/7 General Presentation and Disclosures. The comment period ended on 30 September 2020. In this meeting, the IASB continues its redeliberations of the proposals in the ED.

Principles for presentation and required line items in primary financial statements (Agenda Paper 21A)

Background

In December 2019, the IASB published Exposure Draft ED/2019/7 General Presentation and Disclosures. The comment period ended on 30 September 2020. In this meeting, the IASB continues its redeliberations of the proposals in the ED.

This paper considers the relationship between the general principle of disaggregation for the presentation of information in the primary financial statements and the requirements in IAS 1 for specific line items in those statements. This paper also considers the feedback on the proposals for required line items in the ED, which were largely carried from IAS 1. This paper does not explore the implications of digital reporting which will be discussed in future meetings.

Staff recommendations

The staff recommend the IASB revise:

  • Paragraph 42 of the ED to “this [draft] Standard requires minimum specified line items and subtotals to be presented in the statement(s) of financial performance and the statement of financial position. An entity shall present additional line items (including by disaggregating required minimum line items), headings and subtotals in the statement(s) of financial performance and the statement of financial position when such presentations are relevant to an understanding of the entity’s financial performance or financial position necessary to provide an understandable overview of the entity’s income and expenses or assets, liabilities and equity.”
  • The introductions to the lists of required line items in paragraphs 65 and 82 of the ED to “In addition to items required by other IFRS Accounting Standards, unless doing so reduces how useful the statement is in providing an understandable overview of the entity’s income and expenses [or assets, liabilities and equity], an entity shall present in the statement of profit or loss [or statement of financial position] line items for...”

In addition, the staff recommend that the IASB add application guidance that indicates in general:

  • It is unlikely that the presentation of items set out in paragraph 65 of the ED that are classified in the operating category would reduce how useful the statement is in providing an understandable overview of the entity’s income and expenses; and
  • in contrast, it is likely that the presentation of items set out in paragraph 65(b) of the ED that are classified in the investing category would reduce how useful the statement is in providing an understandable overview of the entity’s income and expenses.

Furthermore, the staff recommend the IASB include in the Basis for Conclusions an analysis of the costs and benefits of requirements for specified line items. The staff recommend that the IASB not revisit the existing requirements for specified line items brought forward from IAS 1 and not to add a specific requirement to present impairments of non-financial assets. The staff recommend the IASB proceed with the proposed requirement to present goodwill separately from intangible assets and proceed with the proposed requirement for required line items to be presented in each affected category in the statement of profit or loss. Lastly, the staff recommend that the IASB not specify any required line items to be presented in the financing category in the statement of profit or loss.

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