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Presentation of financial statements – Example 3 – ACCA FR

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  1. Hello Chris, the profit for the year was $421,000, which is fine but if the $421,000 is for total comprehension income. How will you treat or deal with the properties revaluation increase of $105,000?

    • If $421 was for total comprehensive income (instead of just profit for the period) then this revaluation of $105 would be a part of $412. Therefore the sum to RE column would be 421-105, and 105 would still go to RevSurplus.
      In terms of presentation you can basically do what you find useful. Columns and rows should just separate the amounts important for user.
      So you can do this:
      RE RevS Total
      Total comp income for the year 421 105 526

      Or
      RE RevS Total
      Profit for the year 421 – 421
      Non-current assets rev – 105 105

      The result is pretty the same and both would gain the marks I guess. Just don’t combine RE and RevS columns cause they reflect different types of income

    • You mean for dividends?

      Dr Bank is increase of an asset – when we receive or accrue cash.

      In SOCI we show that we’ve paid dividends to our shareholders from out profit. So profit will be reduced after dividends payment. Increase in RE is Cr, therefore decreasing RE would be Dr

    • I guess we are issuing bonus shares out of retained earnings first so that can’t be credit and we can debit share premium account if we don’t have sufficient balance in retained earnings and other usable reserves and surplus. It’s just that we are trying to transfer the benefit of our earnings and surpluses to our shareholders.

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