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Under IAS 1, all revenues and gains are reported as part of Comprehensive income and classified either under “net profit for the year” or “other comprehensive income”. Explain one benefit and one possible drawback relating to this approach.
What did you think of as a benefit and as a drawback? I’ll tell you if I agree 🙂
it helps companies to know the basis for presentation of general purpose financial statements to ensure comparability both with the entity’s financial statements of previous periods and with the financial statement of the entities
That’s not really a benefit of having the two separate treatments of revenues and gains into either net profit for the year or other comprehensive income, dependent upon the nature of the revenues and gans
And what about the drawback that you were asked for?
The benefit is surely that a reader can see at a glance the profits generated by the normal, every-day on-going business activities separate from gains form “unusual” sources like revaluations
Ok?
it helps companies to know the basis for presentation of general purpose financial statements to ensure comparability both with the entity’s financial statements of previous periods and with the financial statement of the entities
unable to provide relevant evidence for the estimation of future cash flows for the drawback
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