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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 

 
Australian Accounting Interpretations
  • UIG Interpretation 129 "Disclosure – Service Concession Arrangements" 
     
    Disclosure is required if an entity agrees to provide services that give the public access to major economic and social facilities.
 
IFRIC Rejections and Guidance  
  1. May 2007 - Current or non-current presentation of derivatives classified as ‘held for trading’ under IAS 39 
  2. November 2006 - Whether the liability component of a convertible instrument should be classified as current or non-current 
  3. June 2005 - Normal operating cycle  
  4. June 2005 - Comparatives for prospectuses 
  5. February 2003 - Operating and Ordinary Activities
 
1. May 2007 - Current or non-current presentation of derivatives classified as ‘held for trading’ under IAS 39 
 
Issue:  
 
The IFRIC was asked to provide guidance on whether derivatives that are classified as held for trading in accordance with IAS 39 should be presented as current or non-current in the balance sheet. Such derivatives may be settled more than one year after the balance sheet date.  
 
IFRIC Decision: 
 
IAS 39 sets out requirements on the recognition and measurement of financial instruments. It does not address how financial instruments should be presented in the balance sheet. Consequently, some believed that the held-for-trading classification under IAS 39 is solely for measurement purposes.  
 
IAS 1 paragraphs 51-62 set out requirements for the presentation of an asset or a liability as current or non-current in the balance sheet. IAS 1 paragraph 56 states that information about the liquidity and solvency of an entity is useful for users of the financial statements.  
 
In the light of the above requirements, the IFRIC decided not to take the issue on to its agenda. However, it noted that some believe that IAS 1 paragraph 62 could be read as implying that financial liabilities that are classified as held for trading in accordance with IAS 39 are required to be presented as current. Therefore, the IFRIC directed the staff to recommend to the Board an amendment to IAS 1 paragraph 62 to remove that implication.  
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2. November 2006 - Whether the liability component of a convertible instrument should be classified as current or non-current 
 
Issue:  
 
The IFRIC was asked to consider a situation in which an entity issued convertible financial instruments that, in accordance with IAS 32 Financial Instruments: Presentation, were accounted for as two elements—an equity component (ie the holders’ rights to convert the instruments into a fixed number of equity instruments of the issuer any time before the maturity date) and a liability component (ie the entity’s obligation to deliver cash to holders at the maturity date, which was more than one year after the balance sheet date). The issue was whether the liability component should be presented as current or non-current on the face of the issuer’s balance sheet. 
 
IFRIC Decision: 
 
The IFRIC observed that both IAS 1 Presentation of Financial Statements and the Framework for the Preparation and Presentation of Financial Statements state that information about the liquidity and solvency of an entity is useful to users. The IFRIC also noted that the definitions of liquidity and solvency refer to the availability of cash to the entity. On that basis, the IFRIC believed that the liability component should be classified as non-current.  
 
On the other hand, the IFRIC noted that paragraph 60(d)of IAS 1 states that a liability should be classified as current if the entity does not have an unconditional right to defer settlement of the liability for at least twelve months after the balance sheet date. According to paragraph 62 of the Framework, conversion of an obligation into equity is considered as the settlement of a liability. In addition, according to the definition of a financial liability set out in paragraph 16 of IAS 32, a financial liability may be settled through the delivery of a variable number of the issuer’s own equity instruments. Settlement of a liability is not confined to delivery of cash or other assets.  
 
The IFRIC believed that the above IFRS requirements appeared to be in conflict. In addition, the IFRIC observed that practice, in determining whether the liability component was classified as current or non-current, focused on when the issuer was obliged to deliver cash or other assets.  
 
The IFRIC received a comment letter, supporting an alternative rationale for the non-current classification of the liability component of a compound financial instrument. IAS 32 requires the equity and liability components of a compound financial instrument to be accounted for separately. Because IAS 1 addresses the presentation of liabilities (not equity), the comment letter suggested that the equity component should be ignored in determining whether the liability component should be presented as current or non-current in accordance with IAS 1.  
 
The IFRIC decided that both rationales should be drawn to the attention of the Board with a request for clarification. The IFRIC decided not to take the issue onto its own agenda. 
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3. June 2005 - Normal operating cycle 
 
Issue:  
 
The issue regards the classification of current and non-current assets by reference to an entity’s normal operating cycle.  
The issue was whether the guidance in IAS 1.57(a) was applicable only if an entity had a predominant operating cycle. This is particularly relevant to the inventories of conglomerates which, on a narrow reading of the wording, might always have to refer to the twelve-month criterion in IAS 1.57(c), rather than the operating cycle criterion. 
 
IFRIC Decision:  
 
It was clear that the wording should be read in both the singular and the plural and that it was the nature of inventories in relation to the operating cycle that was relevant to classification.  
Furthermore, if inventories of different cycles were held, and it was material to readers’ understanding of an entity’s financial position, then the general requirement in IAS 1.71 already required disclosure of further information. 
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4. June 2005 - Comparatives for prospectuses 
 
Issue:  
 
Whether to amend requirements in IAS 1.36 relating to comparative information, because of perceived practical problems in complying with EU requirements for prospectuses. 
 
IFRIC Decision:  
 
The issue involved a difference of approach between IAS 1 and certain regulatory requirements that were not capable of being resolved merely by issuing an interpretation of IAS 1. 
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4. February 2003 - Operating and Ordinary Activities 
 
Issue:  
 
The Board, in its Exposure Draft of Improvements to IAS 1 proposed deleting the requirement that the line items: “the results of operating activities” and “profit or loss from ordinary activities” be presented. Because some entities are likely to continue presenting these line items, either voluntarily or because they are required to (eg by local law), the IFRIC discussed whether it would be appropriate for it to give guidance on the types of items that would not be included in operating activities and ordinary activities.  
 
IFRIC Decision:  
 
The IFRIC agreed not to take this item on its agenda because it would be best dealt with as part of the joint IASB / FASB project on Reporting Comprehensive Income.  
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