Illustrative financial statements

316 Pages·2012·3.12 MB·English

IFRS
Illustrative fnancial
statements
October 2012
kpmg.com/ifrs
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Contents
What’s new 2
About this publication 3
Independent auditors’ report on consolidated fnancial statements 5
Consolidated fnancial statements 7
Consolidated statement of fnancial position 9
Consolidated statement of comprehensive income – single-statement approach 13
Consolidated statement of changes in equity 17
Consolidated statement of cash fows 21
Notes to the consolidated fnancial statements 25
Appendices
I New standards or amendments frst effective for 2012 and forthcoming requirements 221
II Consolidated income statement and consolidated statement of comprehensive income –
two-statement approach 225
III Consolidated statement of cash fows – direct method 229
IV Example disclosures for entities that early adopt Presentation of Items of Other Comprehensive Income
(Amendments to IAS 1 Presentation of Financial Statements) 231
V Example disclosures for entities that early adopt IFRS 9 Financial Instruments (2010) 233
VI Example disclosures for entities that early adopt IAS 19 Employee Benefts (2011) 255
VII Example disclosures for entities that early adopt IFRS 10 Consolidated Financial Statements,
IFRS 11 Joint Arrangements and IFRS 12 Disclosure of Interests in Other Entities 269
VIII Example disclosures for interests in unconsolidated structured entities 289
IX Example disclosures for entities that early adopt IFRS 13 Fair Value Measurement 291
X Example disclosures for entities that require going concern disclosures 299
XI Example disclosures for distributions of non-cash assets to owners 301
XI Example disclosures for government-related entities under IAS 24 Related Party Disclosures 303
XIII Example disclosures for entities with a service concession arrangement 307
Technical guide 310
Other ways KPMG member frm professionals can help 311
© 2012 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
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What’s new?
Major changes from the September 2011 edition of Illustrative fnancial statements are highlighted by a double-line
border running down the left margin of the text within this publication. The major changes include the following.
●● Example disclosures for the adoption of Deferred Tax: Recovery of Underlying Assets (Amendments to IAS 12), which
is effective for annual periods beginning on or after 1 January 2012.
●● Three new appendices illustrating example disclosures for the early adoption of:
– IAS 19 Employee Benefts (2011);
– IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements and IFRS 12 Disclosure of Interests in
Other Entities (2011), including the related amendments arising from Consolidated Financial Statements, Joint
Arrangements and Disclosure of Interests in Other Entities: Transition Guidance (Amendments to IFRS 10, 11 and 12)
(2012); and
– IFRS 13 Fair Value Measurement (2011).
●● An appendix illustrating example disclosures for the early adoption of IFRS 9 Financial Instruments, taking into account
the amendments arising from IFRS 9 Financial Instruments (2010) and Mandatory Effective Date and Transition
Disclosures (Amendments to IFRS 9 and IFRS 7) (2011).
In addition, the IASB has issued several other amendments to its standards during the past year. To help identify
requirements that are effective for the frst time for annual periods beginning on 1 January 2012, and those that are
available for early adoption in the period, a new appendix has been introduced to list these new requirements, with
cross-references to the related example disclosures when appropriate.
© 2012 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
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About this publication
These illustrative fnancial statements have been produced by the KPMG International Standards Group (part of KPMG
IFRG Limited) and the views expressed herein are those of the KPMG International Standards Group.
Content
This publication helps you prepare fnancial statements in accordance with IFRS. It illustrates one possible format for
fnancial statements based on a fctitious multinational corporation; the corporation is not a frst-time adopter of IFRS
(see ‘Technical guide’).
This publication refects IFRS in issue at 1 October 2012 that are required to be applied by an entity with an annual
period beginning on 1 January 2012 (‘currently effective’ requirements). IFRSs that are effective for annual periods
beginning after 1 January 2012 (‘forthcoming’ requirements) have not been adopted early in preparing these illustrative
fnancial statements. However, certain forthcoming requirements have been introduced in the explanatory notes in a
highlighted box. Appendix I provides a list of standards or amendments that are effective for the frst time for annual
periods beginning on 1 January 2012 and forthcoming requirements. Example disclosures for the adoption of certain
new standards and amendments are included in the appendices to these illustrative fnancial statements.
When preparing fnancial statements in accordance with IFRS, an entity should have regard to applicable legal and
regulatory requirements. This publication does not consider any requirements of a particular jurisdiction. For example,
IFRS does not require the presentation of separate fnancial statements for the parent entity, and this publication
includes only consolidated fnancial statements. However, in some jurisdictions parent entity fnancial information may
also be required.
This publication does not illustrate the requirements of IFRS 4 Insurance Contracts, IFRS 6 Exploration for and
Evaluation of Mineral Resources, IAS 26 Accounting and Reporting by Retirement Beneft Plans or IAS 34 Interim
Financial Reporting. IAS 34 requirements are illustrated in our publication Illustrative condensed interim fnancial
report.
This publication illustrates only the fnancial statements component of a fnancial report and the independent
auditors’ report on the fnancial statements. However, a fnancial report will typically include at least some additional
commentary from management, either in accordance with local laws and regulations or at the election of the entity
(see ‘Technical guide’).
IFRS and its interpretation change over time. Accordingly, these illustrative fnancial statements should not be used as
a substitute for referring to the standards and interpretations themselves.
References
The illustrative fnancial statements are contained on the odd-numbered pages of this publication. The even-numbered
pages contain explanatory comments and notes on the disclosure requirements of IFRS. The illustrative examples,
together with the explanatory notes, are not intended to be seen as a complete and exhaustive summary of all
disclosure requirements that are applicable under IFRS. In addition, an entity need not provide a specifc disclosure
required by an IFRS if the information is not material. For an overview of all disclosure requirements that are applicable
under IFRS, see our publication Disclosure checklist.
To the left of each item disclosed, a reference to the relevant standard is provided. The illustrative fnancial statements
also include references to the 9th Edition 2012/13 of our publication Insights into IFRS.
© 2012 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
4 | Independent auditors’ report
Explanatory note
1. The illustrative auditors’ report on the consolidated fnancial statements has been prepared
based on International Standard on Auditing 700 Forming an Opinion and Reporting on Financial
Statements. The format of the report does not refect any additional requirements of the legal
frameworks of particular jurisdictions.
© 2012 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
Independent auditors’ report | 5
Independent auditors’ report on consolidated fnancial statements

[Addressee]
We have audited the accompanying consolidated fnancial statements of [name of company] (the
‘Company’), which comprise the consolidated statement of fnancial position as at 31 December
2012, the consolidated statements of comprehensive income, changes in equity and cash fows
for the year then ended, and notes, comprising a summary of signifcant accounting policies and
other explanatory information.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated
fnancial statements in accordance with International Financial Reporting Standards, and for
such internal control as management determines is necessary to enable the preparation of
consolidated fnancial statements that are free from material misstatement, whether due to fraud
or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these consolidated fnancial statements based on
our audit. We conducted our audit in accordance with International Standards on Auditing. Those
standards require that we comply with ethical requirements and plan and perform the audit to
obtain reasonable assurance about whether the consolidated fnancial statements are free from
material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the consolidated fnancial statements. The procedures selected depend on our
judgement, including the assessment of the risks of material misstatement of the consolidated
fnancial statements, whether due to fraud or error. In making those risk assessments, we
consider internal control relevant to the entity’s preparation and fair presentation of the
consolidated fnancial statements in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of
the entity’s internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by management, as well as
evaluating the overall presentation of the consolidated fnancial statements.
We believe that the audit evidence we have obtained is suffcient and appropriate to provide a
basis for our audit opinion.
Opinion
In our opinion, the consolidated fnancial statements give a true and fair view of the consolidated
fnancial position of the Company as at 31 December 2012, and of its consolidated fnancial
performance and its consolidated cash fows for the year then ended in accordance with
International Financial Reporting Standards.
KPMG
[Date of report]
[Address]
© 2012 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
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This page has been left blank intentionally.
© 2012 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
7
[Name of Company]
Consolidated fnancial statements
31 December 2012
© 2012 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
8 | Illustrative fnancial statements
Explanatory notes
1. IAS 1.10 IAS 1 Presentation of Financial Statements uses the title ‘Statement of fnancial position’. This
title is not mandatory. An entity may use other titles – e.g. ‘Balance sheet’ – as long as the
meaning is clear and they are not misleading.
2. IAS 1.45 The presentation and classifcation of items in the fnancial statements is retained from one
period to the next unless:
●● changes are required by a new standard or interpretation; or
●● it is apparent, following a signifcant change to an entity’s operations or a review of its fnancial
statements, that another presentation or classifcation would be more appropriate. In this case,
the entity also considers the criteria for the selection and application of accounting policies in
IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors.
3. IAS 1.10, 39 An additional statement of fnancial position and related notes are presented as at the
beginning of the earliest comparative period following a retrospective change in accounting
policy, a retrospective correction of an error, or a reclassifcation of items in the fnancial
statements. The current IAS 1 provides no further guidance in terms of how this requirement
should be interpreted. In our view, the requirement to present a ‘third’ statement of fnancial
position should be interpreted having regard to materiality based on the particular facts and
circumstances. In our view, ‘related notes’ should be interpreted as requiring disclosure of those
notes that are relevant to the reason why the third statement of fnancial position is presented
th
– i.e. not all notes are required in every circumstance. This issue is discussed in the 9 Edition
2012/13 of our publication Insights into IFRS (2.1.35).
Forthcoming requirements
In Annual Improvements to IFRS – 2009–2011 Cycle, which is effective for annual periods
beginning on or after 1 January 2013, the IASB amends IAS 1 to clarify, among other things,
the requirements regarding the presentation of the third statement of fnancial position.
●● The third statement of fnancial position is required only if a retrospective change in
accounting policy, a retrospective correction of an error or a reclassifcation has a material
effect on the information in the statement of fnancial position.
●● Except for the disclosures required under IAS 8, notes related to the third statement of
fnancial position are no longer required.
●● The third statement of fnancial position to be presented is that at the beginning of the
preceding period, rather than at the beginning of the earliest comparative period presented.
This is also the case even if an entity provides additional comparative information beyond
the minimum comparative information requirements.
4. In our view, derivative assets and liabilities should be presented as separate line items in the
statement of fnancial position if they are signifcant. If derivative instruments are not signifcant,
then they may be included within other fnancial assets and other fnancial liabilities, respectively,
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with additional details disclosed in the notes. This issue is discussed in the 9 Edition 2012/13 of
our publication Insights into IFRS (7.8.120.40).
5. IAS 1.60–61 In these illustrative fnancial statements, we have presented current and non-current assets,
and current and non-current liabilities, as separate classifcations in the statement of fnancial
position. An entity may present its assets and liabilities broadly in order of liquidity if such
presentation provides reliable and more relevant information.
Whichever method of presentation is adopted, for each asset and liability line item that combines
amounts expected to be recovered or settled within:
●● no more than 12 months after the end of the reporting period; and
●● more than 12 months after the end of the reporting period,
an entity discloses in the notes the amount expected to be recovered or settled after more than
12 months.
© 2012 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.