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Current assets are assets that are: [IAS 1.66]
Expected to be realised in the entity’s normal operating cycle.
Held primarily for the purpose of trading.
Expected to be realised within 12 months after the reporting period.
Cash and cash equivalents (unless restricted).
All other assets are non-current. [IAS 1.66]Current liabilities are those: [IAS 1.69]
Expected to be settled within the entity’s normal operating cycle.
Held for purpose of trading.
Due to be settled within 12 months.
For which the entity does not have an unconditional right to defer settlement beyond 12 months (settlement by the issue of equity instruments does not impact classification).[https://www.iasplus.com/en/standards/ias/ias1]
My question is on the “Expected to be realised within 12 months after the reporting period” – I understand if “after” was not in the definition. My understanding is that a current asset is to be realised within the 12 of the (before) the reporting date. Where am I getting it wrong?
If the reporting period ends on (for example) 31 December 2014 (and therefore you are producing a SOFP on 31.12.2014, then assets are current assets if you expect them to be realised by 31.12.2015 – i.e. within 12 months after the reporting date of 31.12.2014.
(If that had been realised before the reporting date, then they would already be cash 🙂 )
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