The IASB and FASB discussed issues that had been raised during their review of the early draft of the financial statement presentation proposals.
Unusual or infrequently occurring items
US GAAP currently requires the presentation of unusual or infrequently occurring items in the statement of comprehensive income and disclosure of related information in the notes to financial statements; however IFRS does not have similar requirements. The boards tentatively decided to include those requirements in the forthcoming exposure draft.
Guidance on classifying short-term assets and liabilities
Both US GAAP and IAS 1 Presentation of Financial Statements include application guidance on the classification of assets and liabilities as current (short term) or noncurrent (long term) in the statement of financial position. The boards tentatively decided not to include that application guidance in the exposure draft because the requirement in the exposure draft for classification of assets and liabilities as short term or long term should be sufficient.
Classification of debt
US GAAP and IAS 1 include different guidance for the classification of financial liabilities. The boards agreed to consider addressing those differences in a separate project. Consequently, the IASB's forthcoming exposure draft on financial statement presentation will retain the guidance in IAS 1 on classification of financial liabilities and the FASB's exposure draft will retain the classification guidance in Topic 470 Debt of the FASB Accounting Standards Codification�. The boards noted that any change to their existing guidance on classification of financial liabilities resulting from a potential separate project would be incorporated into the final standard on financial statement presentation.
Mixed presentation in the statement of financial position
Paragraph 65 of IAS 1 includes guidance on how an entity can use a mixed basis of presentation in the statement of financial position. This mixed basis permits some assets and liabilities to be classified using a short-term/long-long term distinction, and for other assets and liabilities to be classified in order of liquidity. The boards tentatively decided to retain that guidance in the exposure draft and to clarify its application.
Supplemental cash flow information
The boards tentatively decided that both the reconciliation of operating income and cash flows, and the presentation of non-cash transaction information should be an integral part of the statement of cash flows and not be disclosed in the notes instead.
Other disclosures from IAS 7 Statement of Cash Flows
IAS 7 paragraph 50 encourages disclosure of the following information:
- the amount of undrawn borrowing facilities that may be available for future business activities and to settle capital commitments
- the amount of cash flows that represent increases in operating capacity and the amount of cash flows that are required to maintain operating capacity
- the amount of cash flows arising from activities of each reportable segment.
The boards tentatively decided that the exposure draft will include (a) as a required disclosure but will not include (b) or (c). The FASB noted that as previously decided its exposure draft will require disclosure of operating cash flows by reportable segment.
Should sections and categories be in the same order on all statements?
The boards tentatively decided that the exposure draft will:
- not prescribe the order in which an entity presents its sections and categories in the financial statements; and
- clarify that an entity should try to align the sections and categories across the statements, but choose an order that produces the most understandable depiction of its activities and allows for presentation of meaningful subtotals and totals.