Download Classification of Elements in Statement of Financial Position and more High school final essays Mathematics in PDF only on Docsity! CLASSIFICATION OF THE ELEMENTS OF STATEMENT OF FINANCIAL POSITION FABM2 – G3 Mrs. Jessica O. Maro
CLASSIFICATION
_ ELEMENTS OF THE STATEMENT OF
———— FINANCIAL POSITION =
1 ASSET. Resource controlled by the entity as a result of past events and from
which future economic benefits are expected to flow to the entity.
2 LIABILITY. Present obligation of the entity arising from past events, the set-
tlement of which is expected to result in an outflow from the entity of resources
embodying economic benefits.
3 EQUITY. Residual interest in the assets of the entity after deducting all its
liabilities.
Classification in the Statement of Financial Position Current assets: Assets that are expected to be realised in cash or used up within the next 12 months. Current assets include cash on hand, cash at bank, short-term investments, inventory, debtors. Non-current assets: Assets that are acquired with the intention of controlling them for a period of time greater than 12 months. Non-current assets include property, equipment, machinery, furniture, vehicles, long-term investments. Classification in the Statement of Financial Position Current liabilities: obligations that will be satisfied within the next 12 months. Current liabilities include bank overdrafts, short-term loans, creditors. Non-current liabilities: obligations that are deferred over a period greater than 12 months. Non-current liabilities: include long-term loans. Classification of the Elements of Statement of Financial Position Non-Current Assets Generally consists of: Long-term Investments Property, Plant, and Equipment . Intangibles Assets Other Assets Intangible Assets Lack physical substance and are not financial instruments. Patents, copyrights, franchises, goodwill, trademarks, trade names, and customer lists. Amortize limited-life intangible assets over their useful lives. Periodically assess indefinite-life intangibles for impairment. Classification of the Elements of Statement of Financial Position Other Assets Items vary in practice. Can include: ➢ ➢ ➢ Long-term prepaid expenses Non-current receivables Assets in special funds ➢ ➢ Property held for sale Restricted cash or securities Classification of the Elements of Statement of Financial Position Current Assets Cash and other assets a company expects to convert into cash, sell, or consume either in one year or in the operating cycle, whichever is longer. Classification of the Elements of Statement of Financial Position • Obligations that a company does not reasonably expect to liquidate within the longer of one year or the normal operating cycle. • Three types: 1. Obligations arising from specific financing situations. 2. Obligations arising from the ordinary operations of the company. 3. Obligations that depend on the occurrence or non- occurrence of one or more future events to confirm the amount payable, or the payee, or the date payable. 5-15 Non-Current Liabilities Classificcaattiioonn Obligations that a company generally expects to settle in its normal operating cycle or one year, whichever is longer. This concept includes: 1. Payables resulting from the acquisition of goods and services: accounts payable, wages payable, and so on. 2. Collections received in advance for the delivery of goods or performance of services, such as unearned rent revenue. 3. Other liabilities whose liquidation will take place within the operating cycle or one year. Current Li bilities Statement of Financial Position Format IFRS does not specify the order or format in which a company presents items in the statement of financial position. Account form or report form. Classification of the Elements of Statement of Financial Position
