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AASB 101 - Presentation of Financial Statements
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Summary 
Developments, Key Differences & History 
Compared to IFRS 
Interpretations 
Rejection Notices 
Questions & Answers 
Articles 
AASB website 

 
List of Q&As relating to AASB 101: 
Financial statements (ANT11/2008) 
Financial statements (ANT09/2008) 
Release of new AASB 101 
SPFRs and AIFRS compliance 
Nursing home bonds and AASB 101 
Financial statements (ANT22/2005) 
Accounting for Dividends 
 
 
Financial statements 
as reported in ANT11/2008 
 
Q: How is the new “statement of comprehensive income” being introduced by AASB 101 different from the old income statement and is the change mandatory?  
 
A: The change in the structure of the income statement being introduced by the recently reissued AASB 101 ‘Presentation of Financial Statements’ is mandatory and is more than a cosmetic change. It arises from a new requirement to present owner related changes in equity separately from non-owner changes in equity. The statement of comprehensive income can be presented in 2 parts (an income statement and a statement of comprehensive income) if preferred or simply as one statement disclosing total comprehensive income. 
 
Revised AASB 101 is applicable for financial years beginning on or after 1 January 2009 and can be adopted early.  
 
For more details on AASB 101 visit the Institute’s website where there is an article (pdf) summarising the new requirements. 
 
 
Financial statements 
as reported in ANT09/2008 
 
Q: I’ve heard that the recent changes to AASB 101 mean that the names of the financial statements are changing again. Is that true? 
 
A: Yes and No! The September 2007 revisions to ‘AASB 101 Presentation of Financial Statements’ do include a number of changes to the names of financial statements.  
These changes were a response to the IASB’s revision of IAS 1 and represent stage 1 of a major financial statement presentation project the IASB is undertaking with the US FASB. They were exposed here in early 2007 as ED 148, and the new standard is applicable for financial years beginning on, or after, 1 January 2009 – although it can be adopted early. 
 
In order to align our standards with their revised international counterparts, the standards will now refer to a balance sheet as a Statement of Financial Position, the terms “financial report” and “general purpose financial report” will be replaced by "financial statement” and “general purpose financial statement”, and the income statement will now be referred to as the “Statement of Comprehensive Income.”  
 
However, since the changes in wording are only being made within the accounting standards themselves, there is no requirement to adopt the new terminology in financial reports produced in accordance with the standards. 
 
 
Release of new AASB 101 
as reported in ANT40/2007 
 
Q: Does the release by the AASB of a revised version of AASB 101 "Presentation of financial statements" affect my unsigned financial statements for 30 June 2007? 
 
A: Yes. AASB 108 paragraph 30 requires financial statements to disclose details concerning any new standards that have been issued but not yet applied because they are not effective. Therefore, if financial reports for 30 June 2007 are as yet unsigned, the note complying with AASB 108 paragraph 30 needs to include a reference to AASB 101, noting that it has been reissued but has not yet been adopted. The note should also make reference to any known or reliably estimable information about the possible impact of this standard on the first financial report to which it will be applied. 
 
Specimen notes complying with AASB 108 are included in the various "specimen published financial statements" published by the major firms and these can be accessed via our website. 
 
While these notes have not yet been updated for AASB 101 they provide guidance as to the kind of information that should be provided. 
 
A summary of the changes being introduced by AASB 101 is contained in the AASB media release accompanying the release of the standard and was also discussed in ANT39. 
 
 
 
SPFRs and AIFRS compliance 
as reported in ANT44/2006 
 
Q: I am doing a special purpose financial report for a large proprietary company that has to comply with AASB 101. What do I do about the requirement in AASB 101 para 14 to disclose a statement of compliance with IFRS? 
 
A: IFRS does not contemplate the concept of the special purpose financial report and so it is impossible to make such a statement. The situation is analogous to that of a not-for-profit that has made use of the exemptions in the Aus paragraphs in the standards and consequently cannot make a statement of compliance - see para Aus 14.2 of AASB 101. 
 
One interpretation would be that para 14 only applies to entities the accounts of which comply with IFRS and so it is not relevant to a special purpose financial report. If the preparers want to make the situation clear, however, we suggest wording to the effect that the entity has complied with accounting standards and IFRS to the extent described in Note 1, and then a list of the accounting standards complied with. Alternatively, the entity could state the extent to which it has complied with the AASBs and then state that it does not comply with IFRS. 
 
 
Nursing home bonds and AASB 101 
as reported in ANT24/2005 
 
Q: I am curious as to the correct treatment by nursing homes of the resident bonds. I am concerned that although the bonds are by legislation interest free, accounting for them under AIFRS will result in a interest component.  
 
A: There is no specific guidance on this issue. 
 
The more prevalent interpretation is that, as the bonds must be paid within 7 days or 2 months of a resident leaving or dying, they should be treated as 'at call' loans and therefore holding them at face value is appropriate. They satisfy the definition of financial liabilities and therefore fall under AASB 139, in particular para 49, which deals with the fair value of a financial liability payable on demand.  
 
In accordance with para 60 of AASB 101 these liabilities are considered to be current as the entity does not have an unconditional right to defer settlement of the liability for at least 12 months after B/S date. The obligation to settle could occur anytime.  
 
AASB 101 is generally more conservative in its view of non-current liabilities than the predecessor Australian standards - see the Institute's analysis of the differences between AASB 101 and its predecessors by clicking here. Alternatively, these bonds could be presented in a liquidity balance sheet, rather than the current/non-current balance sheet (refer second balance sheet in the appendix to AASB 101). 
 
Some practitioners have also suggested that the liability should be accounted for as a provision under AASB 137, being a liability that is uncertain as to its timing (and therefore its amount). We understand, however, that current statistics indicate that the average tenure in nursing homes and hostels is actually very short - only 6 months for nursing homes, slightly longer for hostels - and becoming shorter because of a shift in healthcare policy towards caring for the elderly in their own homes for as long as possible.  
 
Thanks to all our members who have contributed to this debate. 
 
 
Financial statements 
as reported in ANT22/2005 
 
Q: What am I supposed to call the financial statements these days? Are the required names still in the Corporations Act?  
 
A: The financial statements are specified in AASB 101 Presentation of Financial Statements, being:
     
  • Balance sheet 
  • Income statement 
  • tatement of changes in equity, or Statement of recognised income and expense 
  • Cash flow statement
 
The relevant section of the Corporations Act is s295 and its wording was changed with the passage of the CLERP 9 reforms. Previously, s295 (2) specified that the term "financial statements" must include a certain statements under s295 (2c). However, the new s295 (2) refers to "financial statements ... that are required by the accounting standards". 
 
Keen readers of ANT will be aware that ED 148 proposes changes to AASB 101, including to the names of the financial statements. The balance sheet will become the Statement of Financial Position and the income statement the Statement of Recognised Income and Expense. There is one saving grace – the ED makes it clear that these names are optional! 
 
 
Accounting for Dividends 
as reported in ANT05/2005 
 
Q: AASB 137 “Provisions, Contingent Liabilities and Contingent Assets” does not contain the requirements concerning the correct accounting treatment for dividends declared after the balance sheet date that were previously contained in AASB 1044 “Provisions and Contingencies”. Have the requirements been removed?  
 
A: AASB 1044 introduced requirements that prevented dividends declared after the balance sheet date from being recognised in the financial statements on the basis that they did not satisfy the definition of a liability. Instead it required that the aggregate of these dividends be disclosed. 
 
The equivalent non-recognition requirements are now contained in paragraph 12 of AASB 110 "Events after the balance sheet date". However AASB 110 does contain a tighter definition of "declared" - defined as appropriately authorised and no longer at the discretion of the reporting entity, whereas AASB 1044 refers to dividends that were declared, determined or publicly recommended. 
 
Effectively this now means that dividends recommended before reporting date for approval by members at the AGM after reporting date must be disclosed in the financial year they are recommended, and accounted for in the financial year they are approved. The disclosure requirements are contained in paragraph 125 of AASB 101 “Presentation of Financial Statements” which requires disclosure of all dividends proposed or declared before the financial statements were authorised for issue.