K-IFRS 1001: Presentation of Financial Statements

1. Introduction

K-IFRS 1001 ‘Presentation of Financial Statements’ is a fundamental accounting standard that forms the basis of corporate financial reporting. This standard establishes the structure and content of financial statements, playing a crucial role in accurately and transparently communicating a company’s financial position and performance. It directly impacts the financial reporting of all businesses and provides essential information for decision-making by investors, creditors, and other stakeholders.

Through this document, learners will gain the following key benefits:

1. Understanding the basic structure and purpose of each financial statement component
2. Grasping presentation and disclosure requirements for effective financial reporting
3. Learning key principles and concepts to consider when preparing financial statements

2. Overview

The objective of K-IFRS 1001 is to establish standards for presenting general-purpose financial statements. This standard provides comprehensive requirements for the structure and content of financial statements to ensure comparability between companies and provide useful information for user decision-making.

The scope applies to all general-purpose financial statements prepared under International Financial Reporting Standards (K-IFRS), including both separate and consolidated financial statements.

Key terms:

1. General-purpose financial statements: Financial statements that provide information about an entity’s financial position, performance, and cash flows
2. Materiality: The degree to which omission or misstatement of information could influence users’ economic decisions
3. Notes: Explanatory information supplementing the balance sheet, comprehensive income statement, statement of changes in equity, and cash flow statement
4. Other comprehensive income: Income and expense items not recognized in profit or loss

3. Accounting Principles

The fundamental principles of K-IFRS 1001 are:

1. Fair presentation and compliance with IFRS
2. Going concern
3. Accrual basis of accounting
4. Materiality and aggregation
5. Offsetting
6. Frequency of reporting
7. Comparative information
8. Consistency of presentation

Recognition criteria: Elements of financial statements are recognized when they meet the definition criteria, probable future economic benefits will flow to or from the entity, and cost or value can be measured reliably.

Measurement basis: Financial statement items are generally measured at historical cost, but other bases such as fair value, net realizable value, and present value may apply.

4. Related Accounts

Key accounts related to K-IFRS 1001 include:

1. Assets: Resources controlled by the entity as a result of past events, expected to generate future economic benefits
2. Liabilities: Present obligations arising from past events, expected to result in an outflow of economic resources
3. Equity: Residual interest in assets after deducting liabilities
4. Income: Increases in economic benefits through asset inflows/increases or liability decreases
5. Expenses: Decreases in economic benefits through asset outflows/decreases or liability increases

These accounts form the basic elements of financial statements with the following relationships:

Assets = Liabilities + Equity
Equity = Assets - Liabilities
Net Income = Income - Expenses

5. Accounting Treatment and Reporting

General financial statement preparation steps:

1. Recording and journalizing transactions
2. Posting to general ledger
3. Preparing trial balance
4. Recording closing entries
5. Preparing financial statements

Special situation accounting examples:

1. Account reclassification: Items previously classified as current liabilities meeting non-current criteria should be reclassified
2. Discontinued operations: Business components sold or held for sale should be presented separately

Financial statement presentation and disclosure requirements:

1. Statement of financial position
2. Statement of comprehensive income
3. Statement of changes in equity
4. Statement of cash flows
5. Notes

Each statement must include entity name, reporting period, presentation currency, and rounding level.

6. Case Studies

Actual company case: Samsung Electronics 2022 Consolidated Financial Statements
Samsung Electronics’ 2022 consolidated statements followed K-IFRS 1001 requirements. The balance sheet was presented in order of liquidity, and the comprehensive income statement used functional classification of expenses. Notes provided detailed information on accounting policies, estimation uncertainties, and fair value measurements.

Hypothetical scenario:
Company A underwent major restructuring in 2023. The financial statement reflection process included:

1. Recognition of restructuring costs as current expenses
2. Recording restructuring provisions in the balance sheet
3. Separate presentation of discontinued operations in comprehensive income statement
4. Detailed disclosure of restructuring details, impacts, and future plans in notes

7. Recent Amendments and Future Outlook

Recent changes:
In January 2023, the International Accounting Standards Board (IASB) issued amendments to IAS 1 (equivalent to K-IFRS 1001) clarifying liability classification criteria, focusing on entity rights and obligations.

Future outlook:
IASB is conducting a financial statement presentation project aimed at improving statement structure and content. Future discussions may include changes to performance reporting structure and note disclosure improvements.

8. Practice Questions and Discussion Topics

Multiple choice questions:

1. Which is NOT a basic principle of K-IFRS 1001?
   a) Fair presentation
   b) Accrual basis
   c) Cash basis
   d) Going concern
2. Which item is NOT presented in the balance sheet?
   a) Assets
   b) Liabilities
   c) Equity
   d) Income
3. Which is NOT a financial statement required by K-IFRS 1001?
   a) Statement of financial position
   b) Statement of comprehensive income
   c) Statement of appropriation of retained earnings
   d) Statement of cash flows

Discussion topics:

1. Discuss how financial statement presentation affects investor decision-making.
2. Debate the limitations and potential improvements of K-IFRS 1001 given the increasing importance of non-financial information.

9. Conclusion

K-IFRS 1001 ‘Presentation of Financial Statements’ provides the fundamental framework for corporate financial reporting. This standard establishes financial statement structure and content to enhance comparability between entities and provide useful information to stakeholders. Based on principles like fair presentation, going concern, and accrual accounting, it provides guidelines for preparing balance sheets, comprehensive income statements, statements of changes in equity, cash flow statements, and notes.

The practical importance of this standard cannot be overstated. It directly applies to all corporate financial reporting and provides crucial information for decision-making by investors, creditors, regulators, and other stakeholders.

Acquisition Cost of Inventory Under K-IFRS

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