International GAAP® 2019: Generally Accepted Accounting Practice under International Financial Reporting Standards
Page 29
30,100
Profit before tax
161,667
128,000
Income tax expense
(40,417)
(32,000)
Profit for the year from continuing operations
121,250
96,000
Loss for the year from discontinued operations
–
(30,500)
PROFIT FOR THE YEAR
121,250
65,500
Other comprehensive income:
Items that will not be reclassified to profit or loss:
Gains on property revaluation
933
3,367
Investments in equity instruments
(24,000)
26,667
Remeasurements of defined benefit pension plans
(667)
1,333
Share of other comprehensive income of associates(2)
400
(700)
Income tax relating to items that will not be reclassified(3)
5,834
(7,667)
(17,500)
23,000
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translating foreign operations(4)
5,334
10,667
Cash flow hedges(4) (667)
(4,000)
Income tax relating to items that may be reclassified(3)
(1,167)
(1,667)
3,500
5,000
Other comprehensive income for the year, net of tax
(14,000)
28,000
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
107,250
93,500
Presentation of financial statements and accounting policies 139
Profit attributable to:
Owners of the parent 97,000
52,400
Non-controlling
interests
24,250
13,100
121,250
65,500
Total comprehensive income attributable to:
Owners of the parent 85,800
74,800
Non-controlling
interests
21,450
18,700
107,250
93,500
Earnings per share (in currency units):
Basic and diluted
0.46
0.30
Alternatively, items of other comprehensive income could be presented in the statement of profit or loss
and other comprehensive income net of tax.
Other comprehensive income for the year, after tax:
2019
2018
Items that will not be reclassified to profit or loss:
Gains on property revaluation
600
2,700
Investments in equity instruments
(18,000)
20,000
Remeasurements of defined benefit pension plans
(500)
1,000
Share of other comprehensive income of associates
400
(700)
(17,500)
23,000
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translating foreign operations
4,000
8,000
Cash flow hedges
(500)
(3,000)
3,500
5,000
Other comprehensive income for the year, net of tax(3)
(14,000)
28,000
(1)
This means the share of associates’ profit attributable to owners of the associates, i.e. it is after tax and non-controlling interests in the associates.
(2)
This means the share of associates’ other comprehensive income attributable to owners of the associates, i.e. it is after tax and non-controlling interests in the associates. In this example, the other comprehensive income of associates
consists only of items that will not be subsequently reclassified to profit or loss. Entities whose associates’ other
comprehensive income includes items that may be subsequently reclassified to profit or loss are required to present
that amount in a separate line.
(3)
The income tax relating to each item of other comprehensive income is disclosed in the notes.
(4)
This illustrates the aggregated presentation, with disclosure of the current year gain or loss and reclassification
adjustment presented in the notes. Alternatively, a gross presentation can be used.
The illustrative examples in the standard all use the option, which is discussed at 3.2.4.B
below, to present components of other comprehensive income net of related
reclassification adjustments. The disclosure of those reclassification adjustments in a
note is reproduced in Example 3.7 below. This note also demonstrates a reclassification
not to profit and loss but to the statement of financial position. Whilst not addressed
explicitly by the standard, evidently these items (like reclassifications to profit or loss)
need not be shown on the face of the statement.
3.2.4.B Reclassification
adjustments
‘Reclassification adjustments’ are items recognised in profit or loss which were
previously recognised in other comprehensive income (commonly referred to as
‘recycling’) and IAS 1 requires their disclosure. [IAS 1.7, 92-93, 95]. Examples include
adjustments arising in relation to the disposal of a foreign operation and hedged forecast
transactions affecting profit or loss.
140 Chapter
3
The standard allows a choice of how reclassification adjustments are presented. They
may either be presented ‘gross’ on the face of the statement, or alternatively shown in
the notes. In the latter case, components of comprehensive income on the face of the
statement are shown net of any related reclassification adjustments. [IAS 1.94].
IAS 1 illustrates this requirement as follows: [IAS 1 IG Part I]
Example 3.7:
Note disclosure of components of other comprehensive income
XYZ Group
Disclosure of components of other comprehensive income (1)
Notes – Year ended 31 December 2019
(in thousands of currency units)
2019
2018
Other comprehensive income
Exchange differences on translating foreign operations(2)
5,334
10,667
Investments in equity instruments
(24,000)
26,667
Cash flow hedges:
Gains (losses) arising during the year
(4,667)
(4,000)
Less:
reclassification
adjustments for gains
(losses) included in profit or loss
4,000
–
(667)
(4,000)
Gains on property revaluation
933
3,367
Remeasurements of defined benefit pension plans
(667)
1,333
Share of other comprehensive income of associates
400
(700)
Other comprehensive income
(18,667)
37,334
Income tax relating to components of other
comprehensive income(3) 4,667
(9,334)
Other comprehensive income for the year
(14,000)
28,000
(1)
When an entity chooses an aggregated presentation
in the statement of comprehensive income, the amounts for
reclassification adjustments and current year gain or loss are presented in the notes.
(2)
There was no disposal of a foreign operation. Therefore, there is no reclassification adjustment for the years presented.
(3)
The income tax relating to each component of other comprehensive income is disclosed in the notes.
Some IFRSs require that gains and losses recognised in other comprehensive income
should not be ‘recycled’ to profit and loss, and hence will not give rise to reclassification
adjustments. IAS 1 gives the following examples:
(a) revaluation surpluses for revalued property, plant and equipment, and intangible assets;
(b) remeasurements on defined benefit plans;
(c) amounts that are removed from the cash flow hedge reserve or a separate
component of equity and included directly in the initial cost or other carrying
amount of an asset or a liability in accordance with IFRS 9 in respect of a cash flow
hedge or the accounting for the time value of an option (or the forward element of
a forward contract or the foreign currency basis spread of a financial instrument).
These amounts are directly transferred to assets or liabilities.
The standard observes that whilst items in (a) are not reclassified to profit or loss they
may be transferred to retained earnings as the assets concerned are used or
derecognised. [IAS 1.96]. This is illustrated in Example 3.9 below.
Presentation of financial statements and accounting policies 141
3.2.4.C
Tax on items of other comprehensive income
IAS 1 requires disclosure of the amount of income tax relating to each item of other
comprehensive income, including reclassification adjustments, either on the face of the
statement or in the notes. [IAS 1.90]. This may be done by presenting the items of other
comprehensive income either:
(a) net of related tax effects; or
(b) before related tax effects with one amount shown for the aggregate amount of
income tax relating to those items.
If the alternative at (b) is selected, the tax should be allocated between the items that
might be reclassified subsequently to profit and loss and those that will not. [IAS 1.91].
The reference to reclassification adjustments here and in the definition of other
comprehensive income (see 3.2.1 above) seems to suggest that such adjustments are
themselves ‘components’ of other comprehensive income. That would mean that the
standard requires disclosure of tax related to reclassification adjustments. The
implementation guidance, however, suggests this is not required because the note
illustrating the presentation in (b) above allocates tax only to items of comprehensive
income themselves net of related reclassification adjustments.
IAS 1 provides an illustration of both approaches in its implementation guidance.
The statement of comprehensive income and related note analysing tax are illustrated
in Example 3.8 below (the related separate statement of profit or loss is shown in
Example 3.4 above). [IAS 1 IG Part I].
Example 3.8:
Statement of comprehensive income illustrating the presentation of
comprehensive income in two statements with note disclosure of the
tax effects relating to components of other comprehensive income
XYZ Group – Statement of profit or loss and other comprehensive income for the
year ended 31 December 2019
(in thousands of currency units)
2019
2018
Profit for the year
121,250
65,500
Other comprehensive income:
Items that will not be reclassified to profit or loss:
Gains on property revaluation
933
3,367
Remeasurements of defined benefit pension plans
(667)
1,333
Share of other comprehensive income of associates(1)
400
(700)
Income tax relating to items that will not be reclassified(2)
(166)
(1,000)
500
3,000
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translating foreign operations
5,334
10,667
Investments in equity instruments
(24,000)
26,667
Cash flow hedges
(667)
(4,000)
Income tax relating to items that may be reclassified(2)
4,833
(8,334)
(14,500)
25,000
Other comprehensive income for the year, net of tax
(14,000)
28,000
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
107,250
93,500
142 Chapter
3
(in thousands of currency units)
2019
2018
Total comprehensive income attributable to:
Owners of the parent 85,800
74,800
Non-controlling
interests
21,450
18,700
107,250
93,500
Disclosure of tax effects relating to each component of other comprehensive income
Notes
2019
2018
Before-
Tax Net-of-tax
Before-
Tax Net-of-tax
tax
(expense)
amount
tax
(expense)
amount
amount
benefit
amount
benefit
Exchange differences
on translating foreign
operations 5,334
(1,334)
4,000
10,667
(2,667)
8,000
Investments in equity
instruments (24,000)
6,000
(18,000)
26,667
(6,667)
20,000
Cash flow hedges
(667)
167
(500)
(4,000)
1,000
(3,000)
Gains on property
revaluation
933
(333)
600
3,367
(667)
2,700
Remeasurements of defined
benefit pension plans
(667)
167
(500)
1,333
(333)
1,000
Share of other comprehensive
income of associates
400
–
400
(700)
– (700)
Other comprehensive
income (18,667)
4,667
(14,000)
37,334
(9,334)
28,000
(1)
This means the share of associates’ other comprehensive income attributable to owners of the associates, i.e. it is after tax and non-controlling interests in the associates. In this example, the other comprehensive income of associates consists only of items that will not be subsequently reclassified to profit or loss. Entities whose associates’ other comprehensive income includes items that may be subsequently reclassified to profit or loss are required to present that amount in a separate line
.
(2)
The income tax relating to each item of other comprehensive income is disclosed in the notes.
3.2.5 Discontinued
operations
As discussed in Chapter 4 at 3.2, IFRS 5 requires the presentation of a single amount on
the face of the statement of profit or loss relating to discontinued operations, with
further analysis either on the face of the statement or in the notes.
3.2.6
Material and extraordinary items
3.2.6.A Material
items
IAS 1 requires that when items of income or expense (a term covering both profit and
loss, and other comprehensive income) are material, their nature and amount should be
disclosed separately. [IAS 1.97]. Materiality is discussed at 4.1.5.A below. The standard
goes on to suggest that circumstances that would give rise to the separate disclosure of
items of income and expense include:
(a) write-downs of inventories to net realisable value or of property, plant and
equipment to recoverable amount, as well as reversals of such write-downs;
(b) restructurings of the activities of an entity and reversals of any provisions for the
costs of restructuring;