ACCOUNTING FOR COMPANY STATEMENT OF FINANCIAL POSITION (ASSETS)

Learning outcomes  Understand the accounting items – assets, liabilities and owners’ equity  Understand the recognition, classification and measurement of accounting items – assets, liabilities and owners’ equity

Assets  Definition: An asset is a resource controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity.

Recognition  Recognition is the process of incorporating in the balance sheet or income statement an item that meets the definition of an element and satisfies the following criteria for recognition:  It is probable that any future economic benefit associated with the item will flow to or from the entity; and  The item's cost or value can be measured with reliability.  Based on these general criteria: An asset is recognised in the balance sheet when it is probable that the future economic benefits will flow to the entity and the asset has a cost or value that can be measured reliably.

Measurement  Measurement involves assigning monetary amounts at which the elements of the financial statements are to be recognised and reported.  The IFRS Framework acknowledges that a variety of measurement bases are used today to different degrees and in varying combinations in financial statements, including:  Historical cost  Current cost  Net realisable value  Present value (discounted)  Historical cost is the measurement basis most commonly used today, but it is usually combined with other measurement bases.

Classification  An entity must normally present a classified statement of financial position, separating current and noncurrent assets and liabilities, unless a presentation based on liquidity is more relevant.  Current assets are cash; cash equivalent; assets held for collection, sale, or consumption within the entity's normal operating cycle; or assets held for trading within the next 12 months. All other assets are noncurrent. [IAS 1.66]

Minimum items on the face of the statement of financial position [IAS 1.54]  (a) property, plant and equipment  (b) investment property  (c) intangible assets  (d) financial assets (excluding amounts shown under (e), (h), and (i))  (e) investments accounted for using the equity method  (f) biological assets  (g) inventories  (h) trade and other receivables  (i) cash and cash equivalents  (j) assets held for sale

Cont.  (k) trade and other payables  (l) provisions  (m) financial liabilities (excluding amounts shown under (k) and (l))  (n) liabilities and assets for current tax, as defined in IAS 12  (o) deferred tax liabilities and deferred tax assets, as defined in IAS 12  (p) liabilities included in disposal groups  (q) non-controlling interests, presented within equity and  (r) issued capital and reserves attributable to owners of the parent

Presentation in SFP Property, plant and equipment  Disclosed on the face of SFP – The aggregate amount  Disclosed in the notes - The details are presented in the notes under separate headings concerning the amount of land and building, plant and machinery and other categories of non-current assets. To disclose accumulated depreciation to date for each assets and movements during the year.  By way of notes, the methods and rate/useful life of depreciation for each non-current assets are to be stated.

Cont.  Revalued non-current assets – disclosure is to be made of the amount and the year of valuation and whether an external valuer did the valuation  Assets disposed of or held to be disposed during the period – disclosed together with assets acquired on installment purchased plan  To state any impairment loss and accumulated impairment loss Intangible assets  Disclosed on the face of SFP - Aggregate amount  Disclosed in the notes - the details (accumulated amortisation, impairment loss etc.)

Cont. Investments/Financial Instruments  Disclosed on the face of SFP – the aggregate amount  Disclosed in the notes  Separately the amounts of investments in shares, debentures, government securities, in subsidiaries.  Distinguished between investments that are quoted, listed or shares purchased that are not quoted.  State the quoted market values of investments which are quoted, and the directors’ valuation of investments that do not have a market value.  For quoted investments, a distinction should be made between those quoted, listed or dealt in on ant stock exchange in and outside Malaysia.

Cont. Inventories  To be valued at lower of cost and net realisable value Receivables  Should be disclosed under separate headings of: i. Trade debts and bills receivables ii. Loan to a director iii. Deposits with licensed banks, finance companies, other corporations and other deposits iv. Amount owing by holding/subsidiaries/associated companies Cash and cash equivalent  Cash deposits are to be distinguished as to those with licensed banks, finance companies, other corps and others