Chapter 9 - Interim Financial Reporting

(Intermediate Accounting 3)
LECTURE AID
2020
ZEUS VERNON B. MILLAN

Chapter 9 Interim Financial Reporting
Related standard: PAS 34 Interim Financial Reporting
Learning Objectives
• Define an interim financial report.
• State the scope and applicability of PAS 34.
• Briefly describe the income and expense recognition
principles followed in interim financial reporting.
• Describe how income tax expense is computed in the interim
financial statements.
INTERMEDIATE ACCTG 3 (By: Zeus Vernon B. Millan)

Definition of terms
• Interim reporting pertains to the preparation and presentation of

interim financial report for an interim period.
• Interim period is a financial reporting period shorter than a full financial

year.
• Interim financial report means a financial report containing either:

a. a complete set of financial statements (PAS 1); or
b. a set of condensed financial statements (PAS 34)
for an interim period.
INTERMEDIATE ACCTG 3 (By: Zeus V

ernon B. Millan)
Scope
• PAS 34 does not require entities to provide interim financial
reports.
• PAS 34 applies if an entity is (a) required by government, securities

regulators, stock exchanges, and accountancy bodies or (b) the
entity elects or chooses to publish an interim financial report in
accordance with PFRSs.
• PAS 34 encourages publicly traded entities to provide at least

semi-annual interim financial report and publish them not later
than 60 days after the end of the interim period.

ernon B. Millan)
Content of an interim financial report
• An entity presenting an interim financial report has the option of

complying either with PAS 1 (complete set of FS) or PAS 34
(condensed set of FS).

ernon B. Millan)
Complete set of financial statements under PAS 1
1. Statement of financial position;

2. Statement of profit or loss and other comprehensive income;
3. Statement of changes in equity;
4. Statement of cash flows;
5. Notes, comprising a summary of significant accounting policies and
other explanatory information;
(5a) comparative information in respect of the preceding period; and
6. A statement of financial position as at the beginning of the preceding
period (i.e., in cases of retrospective application, retrospective
restatement or reclassification adjustment).

ernon B. Millan)
Minimum content of an interim financial report under PAS 34
1. Condensed statement of financial position;

2. Condensed statement of profit or loss and other comprehensive
income, presented as either (a) a condensed single statement; or
(b) a condensed separate income statement and a condensed
statement of comprehensive income;
3. Condensed statement of changes in equity;
4. Condensed statement of cash flows; and
5. Selected explanatory notes.

ernon B. Millan)
• The term “condensed” means an entity needs only to provide the
minimum information required under PAS 34.
• However, an entity is not prohibited from publishing a complete set

of financial statements in accordance with PAS 1 in its interim
financial report.
• Furthermore, an entity is also not prohibited from including in its

condensed interim financial statements information that is more
than the minimum line items or selected explanatory notes set out
under PAS 34.

ernon B. Millan)
Additional concepts
• Relevance over Reliability – in the interest of timeliness and cost

considerations, less information may be provided at interim dates.
• Materiality and Estimates – an entity may rely on estimates to a

greater extent when preparing interim financial reports.
• Note disclosures – only selected explanatory notes are provided in

interim financial reports to avoid repetition.

ernon B. Millan)
Periods for which interim financial
statements are presented
• Semi-annual interim financial reporting

ernon B. Millan)
Periods for which interim financial
statements are presented (continuation)
• Quarterly interim financial reporting (3rd qtr.)

ernon B. Millan)
Business is highly seasonal
• If an entity's business is highly seasonal, PAS 34 encourages

disclosure of financial information for the latest 12 months and
comparative information for the prior 12-month period in
addition to the interim period financial statements.

ernon B. Millan)
Recognition and measurement
• Gains and losses arising in an interim period are recognized

immediately and are not deferred, e.g., inventory write-downs &
reversals; asset impairment losses & reversals; discontinued
operations; and fair value changes on assets measured at fair value.
• Costs and expenses (income) that benefit the entire year or are
incurred (earned) over the year are spread out over the interim periods,
e.g., depreciation, amortization; property taxes; insurance expense;
interest expense (income); 13th month pay and other year-end bonuses.

ernon B. Millan)
Recognition and measurement (continuation)
• Discretionary income are recognized immediately in the period the

income is earned, e.g., dividend income.
• Income tax expense in the interim periods is computed using the

best estimate of the weighted average annual income tax
rate expected for the full financial year.

ernon B. Millan)
APPLICATION OF CONCEPTS
PROBLEM 2: FOR CLASSROOM DISCUSSION

OPEN FORUM
QUESTIONS????
REACTIONS!!!!!

END

Chapter 9 - Interim Financial Reporting

Uploaded by

Copyright:

Available Formats

Chapter 9 - Interim Financial Reporting

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Chapter 9 - Interim Financial Reporting

Uploaded by

Copyright:

Available Formats

(Intermediate Accounting 3)

ZEUS VERNON B. MILLAN

INTERMEDIATE ACCTG 3 (By: Zeus Vernon B. Millan)

• Interim reporting pertains to the preparation and presentation of

• Interim period is a financial reporting period shorter than a full financial

• Interim financial report means a financial report containing either:

INTERMEDIATE ACCTG 3 (By: Zeus V

• PAS 34 applies if an entity is (a) required by government, securities

• PAS 34 encourages publicly traded entities to provide at least

INTERMEDIATE ACCTG 3 (By: Zeus V

• An entity presenting an interim financial report has the option of

INTERMEDIATE ACCTG 3 (By: Zeus V

1. Statement of financial position;

INTERMEDIATE ACCTG 3 (By: Zeus V

1. Condensed statement of financial position;

INTERMEDIATE ACCTG 3 (By: Zeus V

• However, an entity is not prohibited from publishing a complete set

• Furthermore, an entity is also not prohibited from including in its

INTERMEDIATE ACCTG 3 (By: Zeus V

• Relevance over Reliability – in the interest of timeliness and cost

• Materiality and Estimates – an entity may rely on estimates to a

• Note disclosures – only selected explanatory notes are provided in

INTERMEDIATE ACCTG 3 (By: Zeus V

INTERMEDIATE ACCTG 3 (By: Zeus V

INTERMEDIATE ACCTG 3 (By: Zeus V

• If an entity's business is highly seasonal, PAS 34 encourages

INTERMEDIATE ACCTG 3 (By: Zeus V

• Gains and losses arising in an interim period are recognized

INTERMEDIATE ACCTG 3 (By: Zeus V

• Discretionary income are recognized immediately in the period the

• Income tax expense in the interim periods is computed using the

INTERMEDIATE ACCTG 3 (By: Zeus V

PROBLEM 2: FOR CLASSROOM DISCUSSION

INTERMEDIATE ACCTG 3 (By: Zeus Vernon B. Millan)

INTERMEDIATE ACCTG 3 (By: Zeus Vernon B. Millan)

INTERMEDIATE ACCTG 3 (By: Zeus Vernon B. Millan)

You might also like