Accounting Standard AASB 18 Presentation and Disclosure in Financial Statements

10 A complete set of financial statements comprises:
(a) a statement (or statements) of financial performance for the reporting period (see paragraph 12);
(b) a statement of financial position as at the end of the reporting period;
(c) a statement of changes in equity for the reporting period;
(d) a statement of cash flows for the reporting period;
(e) notes for the reporting period;
(f) comparative information in respect of the preceding period as specified in paragraphs 31–32; and
(g) a statement of financial position as at the beginning of the preceding period if required by paragraph 37.
11 The statements listed in paragraphs 10(a)–10(d) (and their comparative information) are referred to as the primary financial statements. An entity may use titles for the statements other than those used in this Standard. For example, an entity may use the title ‘balance sheet’ instead of ‘statement of financial position’. In addition, although this Standard uses terms such as ‘other comprehensive income’, ‘profit or loss’ and ‘total comprehensive income’, an entity may use other terms to label the totals, subtotals and line items required by this Standard as long as they are labelled in a way that faithfully represents the characteristics of the items, as required by paragraph 43. For example, an entity may use the term ‘net income’ to label ‘profit or loss’.

12 An entity shall present its statement(s) of financial performance as either:
(a) a single statement of profit or loss and other comprehensive income, with profit or loss and other comprehensive income presented in two sections – if this option is chosen, an entity shall present the profit or loss section first followed directly by the other comprehensive income section; or
(b) a statement of profit or loss and a separate statement presenting comprehensive income that shall begin with profit or loss – if this option is chosen, the statement of profit or loss shall immediately precede the statement presenting comprehensive income.

13 In this Standard:
(a) the profit or loss section described in paragraph 12(a) and the statement of profit or loss described in paragraph 12(b) are referred to as the statement of profit or loss; and
(b) the other comprehensive income section described in paragraph 12(a) and the statement presenting comprehensive income described in paragraph 12(b) are referred to as the statement presenting comprehensive income.
14 An entity shall present each of the primary financial statements with equal prominence in a complete set of financial statements.

The roles of the primary financial statements and the notes

15 To achieve the objective of financial statements (see paragraph 9), an entity presents information in the primary financial statements and discloses information in the notes. An entity need only present or disclose material information (see paragraphs 19 and B1–B5).
16 The role of the primary financial statements is to provide structured summaries of a reporting entity’s recognised assets, liabilities, equity, income, expenses and cash flows, that are useful to users of financial statements for:
(a) obtaining an understandable overview of the entity’s recognised assets, liabilities, equity, income, expenses and cash flows;
(c) identifying items or areas about which users of financial statements may wish to seek additional information in the notes.

17 The role of the notes is to provide material information necessary:
(a) to enable users of financial statements to understand the line items presented in the primary financial statements (see paragraph B6); and
(b) to supplement the primary financial statements with additional information to achieve the objective of financial statements (see paragraph B7).
18 An entity shall use the roles of the primary financial statements and the notes, described in paragraphs 16–17, to determine whether to include information in the primary financial statements or in the notes. The different roles of the primary financial statements and the notes mean that the extent of the information required in the notes differs from that in the primary financial statements. The differences mean that:
(a) to provide the structured summaries described in paragraph 16, information provided in the primary financial statements is more aggregated than information provided in the notes; and
(b) to provide the information described in paragraph 17, more detailed information about the entity’s assets, liabilities, equity, income, expenses and cash flows, including the disaggregation of information presented in the primary financial statements, is provided in the notes.

Information presented in the primary financial statements or disclosed in the notes

19 Some Australian Accounting Standards specify information that is required to be presented in the primary financial statements or disclosed in the notes. An entity need not provide a specific presentation or disclosure required by Australian Accounting Standards if the information resulting from that presentation or disclosure is not material. This is the case even if Australian Accounting Standards contain a list of specific requirements or describe them as minimum requirements.
20 An entity shall consider whether to provide additional disclosures when compliance with the specific requirements in Australian Accounting Standards is insufficient to enable users of financial statements to understand the effect of transactions and other events and conditions on the entity’s financial position and financial performance.

Information presented in the primary financial statements

21 Paragraph 16 establishes that the role of the primary financial statements is to provide structured summaries that are useful for the purposes specified in that paragraph (referred to hereafter as a useful structured summary). An entity shall use the role of the primary financial statements to determine what material information to present in those statements, as set out in paragraphs 22–24.
22 To provide a useful structured summary in a primary financial statement, an entity shall comply with specific requirements that determine the structure of the statement. The specific requirements are:
(a) for the statement of profit or loss – the requirements in paragraphs 47, 69, 76 and 78;
(b) for the statement presenting comprehensive income – the requirements in paragraphs 86–88;
(c) for the statement of financial position – the requirements in paragraphs 96 and 104;
(d) for the statement of changes in equity – the requirements in paragraph 107; and
(e) for the statement of cash flows – the requirements in paragraph 10 of AASB 107.
23 Some Australian Accounting Standards require specific line items to be presented separately in the primary financial statements (for example paragraphs 75 and 103 of this Standard). An entity need not present separately a line item in a primary financial statement if doing so is not necessary for the statement to provide a useful structured summary. This is the case even if Australian Accounting Standards contain a list of specific required line items or describe the line items as minimum requirements (see paragraph B8).
24 An entity shall present additional line items and subtotals if such presentations are necessary for a primary financial statement to provide a useful structured summary. When an entity presents additional line items or subtotals, those line items or subtotals shall (see paragraph B9):
(a) comprise amounts recognised and measured in accordance with Australian Accounting Standards;
(b) be compatible with the statement structure created by the requirements listed in paragraph 22;
(c) be consistent from period to period, in accordance with paragraph 30; and
(d) be displayed no more prominently than the totals and subtotals required by Australian Accounting Standards.

Identification of the financial statements

25 An entity shall clearly identify the financial statements and distinguish them from other information in the same published document (see paragraph B10).
26 Australian Accounting Standards apply only to financial statements, and not necessarily to other information provided in an annual report, a regulatory filing or another document. Therefore, it is important that users of financial statements can distinguish information that is prepared using Australian Accounting Standards from other information that may be useful to users but is not the subject of those requirements.
27 An entity shall clearly identify each primary financial statement and the notes. In addition, an entity shall disclose prominently, and repeat when necessary for the information provided to be understandable:
(a) the name of the reporting entity or other means of identification, and any change in that information from the end of the preceding reporting period;
(b) whether the financial statements are of an individual entity or a group of entities;
(c) the date of the end of the reporting period or the period covered by the financial statements;
(d) the presentation currency, as defined in AASB 121 The Effects of Changes in Foreign Exchange Rates; and
(e) the level of rounding used for the amounts in the financial statements (see paragraph B11).

Frequency of reporting

28 An entity shall provide a complete set of financial statements at least annually. When an entity changes the end of its reporting period and provides financial statements for a period longer or shorter than one year, the entity shall disclose, in addition to the period covered by the financial statements:
(a) the reason for using a longer or shorter period; and
(b) the fact that amounts included in the financial statements are not entirely comparable.
29 Normally, an entity consistently prepares financial statements for a one-year period. However, for practical reasons, some entities prefer to report, for example, for a 52-week period. This Standard does not preclude this practice.

Consistency of presentation, disclosure and classification

30 An entity shall retain the presentation, disclosure and classification of items in the financial statements from one reporting period to the next unless:
(a) it is apparent, following a significant change in the nature of the entity’s operations or a review of its financial statements, that another presentation, disclosure or classification would be more appropriate having regard to the criteria for selecting and applying accounting policies in AASB 108 Basis of Preparation of Financial Statements (see paragraph B12); or
(b) an Australian Accounting Standard requires a change in presentation, disclosure or classification.

31 Except when Australian Accounting Standards permit or require otherwise, an entity shall provide comparative information (that is, information for the preceding reporting period) for all amounts reported in the current period’s financial statements. An entity shall include comparative information for narrative and descriptive information if it is necessary for an understanding of the current period’s financial statements (see paragraph B13).
32 An entity shall present a current reporting period and preceding period in each of its primary financial statements and in the notes. Paragraphs B14–B15 set out requirements relating to additional comparative information.

Change in accounting policy, retrospective restatement or reclassification

33 If an entity changes the presentation, disclosure or classification of items in its financial statements, it shall reclassify comparative amounts unless reclassification is impracticable. When an entity reclassifies comparative amounts, it shall disclose (including as at the beginning of the preceding period):
(a) the nature of the reclassification;
(b) the amount of each item or class of items that is reclassified; and
(c) the reason for the reclassification.

34 When it is impracticable to reclassify comparative amounts, an entity shall disclose:
(a) the reason for not reclassifying the amounts; and
(b) the nature of the adjustments that would have been made if the amounts had been reclassified.
35 Enhancing the inter-period comparability of information assists users of financial statements in making economic decisions, especially by allowing the assessment of trends in information for predictive purposes. In some circumstances, it is impracticable to reclassify comparative information for a particular prior reporting period to achieve consistency with the current period. For example, an entity may not have collected data in the prior period(s) in a way that allows reclassification, and it may be impracticable to recreate the information.
36 AASB 108 sets out the adjustments to comparative information required when an entity changes an accounting policy or corrects an error.
37 An entity shall present a third statement of financial position as at the beginning of the preceding period in addition to the comparative information required in paragraphs 31–32 if:
(a) it applies an accounting policy retrospectively, makes a retrospective restatement of items in its financial statements or reclassifies items in its financial statements; and
(b) the retrospective application, retrospective restatement or reclassification has a material effect on the information in the statement of financial position as at the beginning of the preceding period.
38 In the circumstances described in paragraph 37 an entity shall present three statements of financial position – a statement of financial position as at:
(a) the end of the current reporting period;
(b) the end of the preceding period; and
(c) the beginning of the preceding period.
39 When an entity is required to present a third statement of financial position applying paragraph 37, it shall disclose the information required by paragraphs 33⁠–36 and AASB 108. However, it need not provide the related notes to the statement of financial position as at the beginning of the preceding period.
40 The date of that third statement of financial position shall be as at the beginning of the preceding period regardless of whether an entity’s financial statements provide comparative information for earlier periods (as permitted by paragraphs B14–B15).

Aggregation and disaggregation

Principles of aggregation and disaggregation

41 For the purposes of this Standard, an item is an asset, liability, equity instrument or reserve, income, expense or cash flow or any aggregation or disaggregation of such assets, liabilities, equity, income, expenses or cash flows. A line item is an item that is presented separately in the primary financial statements. Other material information about items is disclosed in the notes. Unless doing so would override specific aggregation or disaggregation requirements in Australian Accounting Standards, an entity shall (see paragraphs B16–B23):
(a) classify and aggregate assets, liabilities, equity, income, expenses or cash flows into items based on shared characteristics;
(c) aggregate or disaggregate items to present line items in the primary financial statements that fulfil the role of the primary financial statements in providing useful structured summaries (see paragraph 16);
(d) aggregate or disaggregate items to disclose information in the notes that fulfils the role of the notes in providing material information (see paragraph 17); and
(e) ensure that aggregation and disaggregation in the financial statements do not obscure material information (see paragraph B3).
42 Applying the principles in paragraph 41, an entity shall disaggregate items whenever the resulting information is material. If, applying paragraph 41(c), an entity does not present material information in the primary financial statements, it shall disclose the information in the notes. Paragraphs B79 and B111 set out examples of income, expenses, assets, liabilities and items of equity that might have sufficiently dissimilar characteristics that presentation in the statement of profit or loss or statement of financial position or disclosure in the notes is necessary to provide material information.
43 An entity shall label and describe items presented in the primary financial statements (that is, totals, subtotals and line items) or items disclosed in the notes in a way that faithfully represents the characteristics of the item (see paragraphs B24–B26). To faithfully represent an item, an entity shall provide all descriptions and explanations necessary for a user of financial statements to understand the item. In some cases, an entity might need to include in the descriptions and explanations the meaning of the terms the entity uses and information about how it has aggregated or disaggregated assets, liabilities, equity, income, expenses and cash flows.

Offsetting

44 An entity shall not offset assets and liabilities or income and expenses, unless required or permitted by an Australian Accounting Standard (see paragraphs B27–B28).
45 An entity reports separately both assets and liabilities, and income and expenses. Offsetting in the statement(s) of financial performance or the statement of financial position, except when offsetting reflects the substance of the transaction or other event, reduces users’ ability to understand the transactions and other events and conditions that have occurred and to assess the entity’s future cash flows. Measuring assets net of valuation allowances – for example, obsolescence allowances on inventories and allowances for expected credit losses on financial assets – is not offsetting.

Statement of profit or loss

46 An entity shall include all items of income and expense in a reporting period in the statement of profit or loss unless an Australian Accounting Standard requires or permits otherwise (see paragraphs 88–95 and B86).

Categories in the statement of profit or loss

47 An entity shall classify income and expenses included in the statement of profit or loss in one of five categories (see paragraph B29):
(a) the operating category (see paragraph 52);
(b) the investing category (see paragraphs 53–58);
(c) the financing category (see paragraphs 59–66);
(d) the income taxes category (see paragraph 67); and
(e) the discontinued operations category (see paragraph 68).
48 Paragraphs 52–68 set out requirements for classifying income and expenses in the operating, investing, financing, income taxes and discontinued operations categories. In addition, paragraphs B65–B76 set out requirements on how foreign exchange differences, the gain or loss on the net monetary position, and gains and losses on derivatives and designated hedging instruments are classified in the categories.

49 To classify income and expenses in the operating, investing and financing categories, an entity shall assess whether it has a specified main business activity – that is a main business activity of (see paragraphs B30–B41):
(a) investing in particular types of assets, referred to hereafter as investing in assets (see paragraph 53); or
(b) providing financing to customers.
50 Applying paragraphs 55–58 and 65–66, an entity with a specified main business activity classifies in the operating category some income and expenses that would have been classified in the investing or financing category if the activity were not a main business activity.

51 If an entity:
(a) invests in assets as a main business activity, it shall disclose that fact.
(b) provides financing to customers as a main business activity, it shall disclose that fact.
(c) identifies a different outcome from its assessment of whether it invests in assets or provides financing to customers as a main business activity (see paragraph B41), it shall disclose:
(i) the fact the outcome of the assessment has changed and the date of the change.
(ii) the amount and classification of items of income and expense before and after the date of the change in the outcome of the assessment in the current period and the amount and classification in the prior period for the items for which the classification has changed because of the changed outcome of the assessment, unless it is impracticable to do so. If an entity does not disclose the information because it is impracticable to do so, the entity shall disclose that fact.

The operating category

52 An entity shall classify in the operating category all income and expenses included in the statement of profit or loss that are not classified in (see paragraph B42):
(a) the investing category;
(b) the financing category;
(c) the income taxes category; or
(d) the discontinued operations category.

The investing category

53 Except as required by paragraphs 55–58 for an entity that has a specified main business activity, an entity shall classify in the investing category income and expenses specified in paragraph 54 from:
(a) investments in associates, joint ventures and unconsolidated subsidiaries (see paragraphs B43–B44);
(b) cash and cash equivalents; and
(c) other assets if they generate a return individually and largely independently of the entity’s other resources (see paragraphs B45–B49).
54 The income and expenses from the assets identified in paragraph 53 that an entity shall classify in the investing category comprise the amounts included in the statement of profit or loss for (see paragraph B47):
(a) the income generated by the assets;
(b) the income and expenses that arise from the initial and subsequent measurement of the assets, including on derecognition of the assets; and
(c) the incremental expenses directly attributable to the acquisition and disposal of the assets – for example, transaction costs and costs to sell the assets.

55 For the assets specified in paragraph 53(a) (that is, investments in associates, joint ventures and unconsolidated subsidiaries) that an entity invests in as a main business activity (see paragraph B38), the entity shall classify the income and expenses specified in paragraph 54:
(a) in the investing category if the assets are accounted for applying the equity method (see paragraphs B43(a) and B44(a)); or
(b) in the operating category if the assets are not accounted for applying the equity method (see paragraphs B43(b)–(c) and B44(b)–(c)).
56 For the assets specified in paragraph 53(b) (that is, cash and cash equivalents), an entity shall classify the income and expenses specified in paragraph 54 in the investing category unless:
(a) it invests as a main business activity in financial assets within the scope of paragraph 53(c) – in which case it shall classify the income and expenses in the operating category.
(b) it does not meet the requirements in (a) but provides financing to customers as a main business activity – in which case it shall classify:
(i) the income and expenses from cash and cash equivalents that relate to providing financing to customers, for example cash and cash equivalents held for related regulatory requirements – in the operating category.
(ii) the income and expenses from cash and cash equivalents that do not relate to providing financing to customers – by applying an accounting policy choice to classify the income and expenses specified in paragraph 54 in the operating category or the investing category. The choice of accounting policy shall be consistent with that made by the entity for the purpose of the related accounting policy for income and expenses from liabilities in paragraph 65(a)(ii).
57 If an entity applying paragraph 56(b) cannot distinguish between the cash and cash equivalents described in paragraphs 56(b)(i) and 56(b)(ii), it shall apply the accounting policy choice in paragraph 56(b)(ii) to classify income and expenses from all cash and cash equivalents in the operating category.
58 For the assets specified in paragraph 53(c) (that is, other assets if they generate a return individually and largely independently of the entity’s other resources) that an entity invests in as a main business activity (see paragraph B40), the entity shall classify the income and expenses specified in paragraph 54 in the operating category.

The financing category

59 To determine what income and expenses to classify in the financing category, an entity shall distinguish between:
(a) liabilities that arise from transactions that involve only the raising of finance (see paragraphs B50–B51); and
(b) liabilities other than those described in (a) – that is, liabilities that arise from transactions that do not involve only the raising of finance (see paragraph B53).
60 For the liabilities specified in paragraph 59(a) (that is, liabilities that arise from transactions that involve only the raising of finance), except as set out in paragraphs 63–66, an entity shall classify in the financing category the amounts included in the statement of profit or loss for:
(a) income and expenses that arise from the initial and subsequent measurement of the liabilities, including on derecognition of the liabilities (see paragraph B52); and
(b) the incremental expenses directly attributable to the issue and extinguishment of the liabilities – for example, transaction costs.
61 For the liabilities specified in paragraph 59(b) (that is, liabilities that arise from transactions that do not involve only the raising of finance), except as set out in paragraphs 63–64, an entity shall classify in the financing category:
(a) interest income and expenses, but only if the entity identifies such income and expenses for the purpose of applying other requirements in Australian Accounting Standards; and
(b) income and expenses arising from changes in interest rates, but only if the entity identifies such income and expenses for the purpose of applying other requirements in Australian Accounting Standards.
62 Paragraphs B56–B57 set out how an entity shall apply the requirements in paragraphs 59–61 to hybrid contracts that contain a host that is a liability.
63 The requirements in paragraphs 60–61 do not apply to gains and losses on derivatives and designated hedging instruments. An entity shall apply paragraphs B70–B76 to classify such gains and losses.

64 An entity shall exclude from the financing category and classify in the operating category:
(a) income and expenses from issued investment contracts with participation features recognised applying AASB 9 Financial Instruments (see paragraph B58); and
(b) insurance finance income and expenses included in the statement of profit or loss applying AASB 17 Insurance Contracts.

65 If an entity provides financing to customers as a main business activity, it shall classify income and expenses (see paragraph B59):
(a) from the liabilities specified in paragraph 59(a) (that is, liabilities that arise from transactions that involve only the raising of finance):
(i) if the liabilities relate to providing financing to customers – in the operating category.
(ii) if the liabilities do not relate to providing financing to customers – by applying an accounting policy choice to classify the income and expenses specified in paragraph 60 in the operating category or the financing category. The choice of accounting policy shall be consistent with that made by the entity for the purpose of the related accounting policy for income and expenses from cash and cash equivalents in paragraph 56(b)(ii).
(b) from the liabilities specified in paragraph 59(b) (that is, liabilities that arise from transactions that do not involve only the raising of finance):
(i) if the income and expenses are specified in paragraph 61 – in the financing category; or
(ii) if the income and expenses are not specified in paragraph 61 – in the operating category.
66 If an entity applying paragraph 65(a) cannot distinguish between the liabilities described in paragraphs 65(a)(i) and 65(a)(ii), it shall apply the accounting policy choice in paragraph 65(a)(ii) to classify income and expenses from all such liabilities in the operating category.

The income taxes category

67 An entity shall classify in the income taxes category tax expense or tax income that is included in the statement of profit or loss applying AASB 112 Income Taxes, and any related foreign exchange differences (see paragraphs B65–B68).

The discontinued operations category

68 An entity shall classify in the discontinued operations category income and expenses from discontinued operations as required by AASB 5 Non-current Assets Held for Sale and Discontinued Operations.

Totals and subtotals to be presented in the statement of profit or loss

69 An entity shall present totals and subtotals in the statement of profit or loss for:
(a) operating profit or loss (see paragraph 70);
(b) profit or loss before financing and income taxes (see paragraph 71), subject to paragraph 73; and
(c) profit or loss (see paragraph 72).

70 Operating profit or loss comprises all income and expenses classified in the operating category.

71 Profit or loss before financing and income taxes comprises:
(a) operating profit or loss; and
(b) all income and expenses classified in the investing category.
72 Profit or loss is the total of income less expenses included in the statement of profit or loss. Accordingly, it comprises all income and expenses classified in all categories in the statement of profit or loss (see paragraph 47).
73 An entity shall not apply paragraph 69(b) if it applies the accounting policy set out in paragraph 65(a)(ii) of classifying in the operating category income and expenses from liabilities that do not relate to the provision of financing to customers. However, such an entity shall apply paragraph 24 to determine whether to present an additional subtotal after operating profit and before the financing category. For example, the entity would present a subtotal for operating profit or loss and income and expenses from investments accounted for using the equity method if the entity determines doing so is necessary to provide a useful structured summary of its income and expenses.
74 If an entity described in paragraph 73 presents an additional subtotal comprising operating profit or loss and all income and expenses classified in the investing category, it shall not label the subtotal in a way that implies the subtotal excludes financing amounts, such as ‘profit before financing’. Applying paragraph 43, the entity shall label the subtotal in a way that faithfully represents the amounts included in the subtotal.

Items to be presented in the statement of profit or loss or disclosed in the notes

75 An entity shall present in the statement of profit or loss line items for (see paragraph B77):
(a) amounts required by this Standard, namely:
(i) revenue, presenting separately the line items described in (b)(i) and (c)(i);
(ii) operating expenses, presenting separately line items as required by paragraphs 78 and 82(a);
(iii) share of the profit or loss of associates and joint ventures accounted for using the equity method;
(iv) income tax expense or income; and
(v) a single amount for the total of discontinued operations (see AASB 5);
(b) amounts required by AASB 9, namely:
(i) interest revenue calculated using the effective interest method;
(ii) impairment losses (including reversals of impairment losses or impairment gains) determined in accordance with Section 5.5 of AASB 9;
(iii) gains and losses arising from the derecognition of financial assets measured at amortised cost;
(iv) any gain or loss arising from the difference between the fair value of a financial asset and its previous amortised cost at the date of reclassification from amortised cost measurement to measurement at fair value through profit or loss; and
(v) any cumulative gain or loss previously recognised in other comprehensive income that is reclassified to profit or loss at the date of reclassification of a financial asset from measurement at fair value through other comprehensive income to measurement at fair value through profit or loss; and
(c) amounts required by AASB 17, namely:
(i) insurance revenue;
(ii) insurance service expenses from contracts issued within the scope of AASB 17;
(iii) income or expenses from reinsurance contracts held;
(iv) insurance finance income or expenses from contracts issued within the scope of AASB 17; and
(v) finance income or expenses from reinsurance contracts held.
76 An entity shall present in the statement of profit or loss (outside all the categories described in paragraph 47) an allocation of profit or loss for the reporting period attributable to:
(b) owners of the parent.
77 Paragraphs B78–B79 set out requirements on how an entity uses its judgement to determine whether to present additional line items in the statement of profit or loss or disclose items in the notes.

Presentation and disclosure of expenses classified in the operating category

78 In the operating category of the statement of profit or loss, an entity shall classify and present expenses in line items in a way that provides the most useful structured summary of its expenses, using one or both of these characteristics (see paragraphs B80–B85):
(a) the nature of expenses; or
(b) the function of the expenses within the entity.
79 Any individual line item shall comprise operating expenses aggregated on the basis of only one of these characteristics, but the same characteristic does not have to be used as the aggregation basis for all line items (see paragraph B81).
80 In classifying expenses by nature (‘nature expenses’), an entity provides information about operating expenses related to the nature of the economic resources consumed to accomplish the entity’s activities without reference to the activities in relation to which those economic resources were consumed. Such information includes information about raw material expense, employee benefit expense, depreciation and amortisation.
81 In classifying expenses by function within the entity, an entity allocates and aggregates operating expenses according to the activity to which the consumed resource relates. For example, cost of sales is a function line item that combines expenses relating to an entity’s production or other revenue-generating activities such as: raw material expense, employee benefit expense, depreciation and amortisation. Therefore, when classifying expenses by function, an entity might:
(a) allocate to several function line items (such as cost of sales and research and development) expenses relating to economic resources of the same nature (such as employee benefit expense); and
(b) include in a single function line item an allocation of expenses relating to economic resources of several natures (such as raw material expense, employee benefit expense, depreciation and amortisation).
82 If an entity presents one or more line items comprising expenses classified by function in the operating category of the statement of profit or loss, it shall:
(a) present a separate line item for its cost of sales, if the entity classifies operating expenses in functions that include a cost of sales function. That line item shall include the total of inventory expense described in paragraph 38 of AASB 102 Inventories.
(b) disclose a qualitative description of the nature of expenses included in each function line item.
83 An entity that presents one or more line items comprising expenses classified by function in the operating category of the statement of profit or loss shall also disclose in a single note:
(a) the total for each of:
(i) depreciation, comprising the amounts required to be disclosed by paragraph 73(e)(vii) of AASB 116 Property, Plant and Equipment, paragraph 79(d)(iv) of AASB 140 Investment Property and paragraph 53(a) of AASB 16 Leases;
(ii) amortisation, comprising the amount required to be disclosed by paragraph 118(e)(vi) of AASB 138 Intangible Assets;
(iii) employee benefits, comprising the amount for employee benefits recognised by an entity applying AASB 119 Employee Benefits and the amount for services received from employees recognised by an entity applying AASB 2 Share-based Payment;
(iv) impairment losses and reversals of impairment losses, comprising the amounts required to be disclosed by paragraphs 126(a) and 126(b) of AASB 136 Impairment of Assets; and
(v) write-downs and reversals of write-downs of inventories, comprising the amounts required to be disclosed by paragraphs 36(e) and 36(f) of AASB 102; and
(b) for each total listed in (a)(i)–(v):
(i) the amount related to each line item in the operating category (see paragraph B84); and
(ii) a list of any line items outside the operating category that also include amounts relating to the total.
84 Paragraph 41 requires an entity to disaggregate items to provide material information. However, an entity that applies paragraph 83 is exempt from disclosing:
(a) in relation to function line items presented in the operating category of the statement of profit or loss – disaggregated information about the amounts of nature expenses included in each line item, beyond the amounts specified in paragraph 83; and
(b) in relation to nature expenses specifically required by an Australian Accounting Standard to be disclosed in the notes – disaggregated information about the amounts of the expenses included in each function line item presented in the operating category of the statement of profit or loss, beyond the amounts specified in paragraph 83.
85 The exemption in paragraph 84 relates to disaggregation of operating expenses. However, it does not exempt an entity from applying specific disclosure requirements relating to those expenses in Australian Accounting Standards.

Statement presenting comprehensive income

86 An entity shall present in the statement presenting comprehensive income totals for:
(a) profit or loss;
(b) other comprehensive income (see paragraphs B86–B87); and
(c) comprehensive income, being the total of profit or loss and other comprehensive income.

87 An entity shall present an allocation of comprehensive income for the reporting period attributable to:
(b) owners of the parent.

Other comprehensive income

88 An entity shall classify income and expenses included in the statement presenting comprehensive income in one of two categories:
(a) income and expenses that will be reclassified to profit or loss when specific conditions are met; and
(b) income and expenses that will not be reclassified to profit or loss.

89 An entity shall present, in each of the categories of the statement presenting comprehensive income, line items for:
(a) the share of other comprehensive income of associates and joint ventures accounted for using the equity method; and
(b) other items of other comprehensive income.
90 An entity shall present in the statement presenting comprehensive income or disclose in the notes reclassification adjustments relating to components of other comprehensive income (see paragraphs B88–B89).
91 Other Australian Accounting Standards specify whether and when amounts previously included in other comprehensive income are reclassified to profit or loss. Such reclassifications are referred to in this Standard as reclassification adjustments. An entity includes a reclassification adjustment with the related component of other comprehensive income in the period that the adjustment is reclassified to profit or loss. An entity might have included these amounts in other comprehensive income as unrealised gains in the current or prior periods. An entity shall deduct them from other comprehensive income in the period in which the realised gains are reclassified to profit or loss to avoid including them in total comprehensive income twice.
92 An entity disclosing reclassification adjustments in the notes shall present in the statement presenting comprehensive income the items of other comprehensive income after any related reclassification adjustments.
93 An entity shall either present in the statement presenting comprehensive income or disclose in the notes the amount of income taxes relating to each item of other comprehensive income, including reclassification adjustments (see paragraphs 61A and 63 of AASB 112).

94 An entity may present items of other comprehensive income either:
(a) net of related tax effects; or
(b) before related tax effects, with one amount shown for the aggregate amount of income taxes relating to those items.
95 If an entity selects the alternative in paragraph 94(b), it shall allocate the tax between the categories set out in paragraph 88.

Classification of assets and liabilities as current or non-current

96 An entity shall present current and non-current assets, and current and non-current liabilities, as separate classifications in its statement of financial position in accordance with paragraphs 99–102 except when a presentation based on liquidity provides a more useful structured summary. When that exception applies, an entity shall present all assets and liabilities in order of liquidity (see paragraphs B90–B93).
97 Whichever method of presentation is adopted, an entity shall disclose the amount expected to be recovered or settled after more than 12 months for each asset and liability line item that combines amounts expected to be recovered or settled:
(a) no more than 12 months after the reporting period; and
(b) more than 12 months after the reporting period.
98 When an entity presents current and non-current assets, and current and non-current liabilities, as separate classifications in its statement of financial position, it shall not classify deferred tax assets (liabilities) as current assets (liabilities).

Current assets

99 An entity shall classify an asset as current when (see paragraphs B94–B95):
(a) it expects to realise the asset, or intends to sell or consume it, in its normal operating cycle;
(b) it holds the asset primarily for the purpose of trading;
(c) it expects to realise the asset within 12 months after the reporting period; or
(d) the asset is cash or a cash equivalent (as defined in AASB 107), unless the asset is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period.

100 An entity shall classify all assets other than those specified in paragraph 99 as non-current.

Current liabilities

101 An entity shall classify a liability as current when:
(a) it expects to settle the liability in its normal operating cycle (see paragraphs B96 and B107–B108);
(b) it holds the liability primarily for the purpose of trading (see paragraph B97);
(c) the liability is due to be settled within 12 months after the reporting period (see paragraphs B97–B98 and B107–B108); or
(d) it does not have the right at the end of the reporting period to defer settlement of the liability for at least 12 months after the reporting period (see paragraphs B99–B108).

102 An entity shall classify all liabilities other than those specified in paragraph 101 as non-current.

Items to be presented in the statement of financial position or disclosed in the notes

103 An entity shall present in the statement of financial position line items for:
(a) property, plant and equipment;
(b) investment property;
(c) intangible assets;
(d) goodwill;
(e) financial assets (excluding amounts shown under (g), (j) and (k));
(f) portfolios of contracts within the scope of AASB 17 that are assets, disaggregated as required by paragraph 78 of AASB 17;
(g) investments accounted for using the equity method;
(h) biological assets within the scope of AASB 141 Agriculture;
(i) inventories;
(j) trade and other receivables;
(k) cash and cash equivalents;
(l) the total of assets classified as held for sale and assets included in disposal groups classified as held for sale in accordance with AASB 5;
(m) trade and other payables;
(n) provisions;
(o) financial liabilities (excluding amounts shown under (m) and (n));
(p) portfolios of contracts within the scope of AASB 17 that are liabilities, disaggregated as required by paragraph 78 of AASB 17;
(q) liabilities and assets for current tax, as defined in AASB 112;
(r) deferred tax liabilities and deferred tax assets, as defined in AASB 112; and
(s) liabilities included in disposal groups classified as held for sale in accordance with AASB 5.

104 An entity shall present in the statement of financial position:
(b) issued capital and reserves attributable to owners of the parent.
105 Paragraphs B109–B111 set out requirements on how an entity uses its judgement to determine whether to present additional line items in the statement of financial position or disclose items in the notes.
106 Subject to paragraph 96, this Standard does not prescribe the order or format in which an entity presents items in the statement of financial position. In addition, the descriptions used and the ordering of items or aggregation of similar items may be amended according to the nature of the entity and its transactions, to provide a useful structured summary of the entity’s assets, liabilities and equity. For example, a financial institution may amend the descriptions in paragraph 103 to provide a useful structured summary of the assets, liabilities and equity of a financial institution.

Statement of changes in equity

Information to be presented in the statement of changes in equity

107 An entity shall present a statement of changes in equity as required by paragraph 10. The statement of changes in equity shall include:
(a) total comprehensive income for the reporting period, showing separately the total amounts attributable to owners of the parent and to non-controlling interests;
(b) for each component of equity, the effects of retrospective application or retrospective restatement recognised in accordance with AASB 108; and
(c) for each component of equity, a reconciliation between the carrying amount at the beginning and the end of the period, separately (as a minimum) presenting changes resulting from:
(i) profit or loss;
(ii) other comprehensive income; and
(iii) transactions with owners in their capacity as owners, showing separately contributions by and distributions to owners and changes in ownership interests in subsidiaries that do not result in a loss of control.
108 AASB 108 requires retrospective adjustments for changes in accounting policies, to the extent practicable, except when the transition requirements in another Australian Accounting Standard require otherwise. AASB 108 also requires restatements to correct errors to be made retrospectively, to the extent practicable. Retrospective adjustments and retrospective restatements are not changes in equity, but they are adjustments to the opening balance of retained earnings, except when Australian Accounting Standards require retrospective adjustment of another component of equity. Paragraph 107(b) requires an entity to present in the statement of changes in equity the total adjustment to each component of equity resulting from changes in accounting policies and, separately, from corrections of errors. An entity shall present these adjustments for each prior reporting period and the beginning of the period.

Information to be presented in the statement of changes in equity or disclosed in the notes

109 For each component of equity an entity shall either present in the statement of changes in equity or disclose in the notes an analysis of other comprehensive income by item (see paragraph 107(c)(ii)).
110 An entity shall either present in the statement of changes in equity or disclose in the notes the amount of dividends recognised as distributions to owners during the reporting period, and the related amount of dividends per share.
111 In paragraph 107, the components of equity include, for example, each class of contributed equity, the accumulated balance of each class of other comprehensive income and retained earnings.
112 Changes in an entity’s equity between the beginning and the end of the reporting period reflect the increase or decrease in its net assets during the period. Except for changes resulting from transactions with owners in their capacity as owners (such as equity contributions, reacquisitions of the entity’s own equity instruments and dividends) and transaction costs directly related to such transactions, the overall change in equity during a period represents the total amount of income and expenses, including gains and losses, generated by the entity’s activities during that period.

Notes

Structure

113 An entity shall disclose in the notes:
(a) information about the basis of preparation of the financial statements (see paragraphs 6A–6N of AASB 108) and the specific accounting policies used (see paragraphs 27A–27I of AASB 108);
(b) information required by Australian Accounting Standards that is not presented in the primary financial statements; and
(c) other information that is not presented in the primary financial statements, but is necessary for an understanding of any of them (see paragraph 20).
114 An entity shall, as far as practicable, present notes in a systematic manner (see paragraph B112). In determining a systematic manner, the entity shall consider the effect on the understandability and comparability of its financial statements. An entity shall cross-reference each item in the primary financial statements to any related information in the notes. If amounts disclosed in the notes are included in one or more line items in the primary financial statements, an entity shall disclose in the note the line item(s) in which the amounts are included.
115 An entity may disclose notes providing information about the basis of preparation of the financial statements and specific accounting policies used in a separate section of the financial statements.

116 If not disclosed elsewhere in information published with the financial statements, an entity shall disclose in the notes:
(a) the domicile and legal form of the entity, its country of incorporation and the address of its registered office (or principal place of business, if different from the registered office);
(b) a description of the nature of the entity’s operations and its principal activities;
(c) the name of the parent and the ultimate parent of the group; and
(d) if it is a limited-life entity, information regarding the length of its life.

Identification of management-defined performance measures

117 A management-defined performance measure is a subtotal of income and expenses that (see paragraphs B113–B122):
(a) an entity uses in public communications outside financial statements;
(b) an entity uses to communicate to users of financial statements management’s view of an aspect of the financial performance of the entity as a whole; and
(c) is not listed in paragraph 118, or specifically required to be presented or disclosed by Australian Accounting Standards.

118 Subtotals of income and expenses that are not management-defined performance measures are:
(a) gross profit or loss (revenue minus cost of sales) and similar subtotals (see paragraph B123);
(b) operating profit or loss before depreciation, amortisation and impairments within the scope of AASB 136;
(c) operating profit or loss and income and expenses from all investments accounted for using the equity method;
(d) for an entity that applies paragraph 73, a subtotal comprising operating profit or loss and all income and expenses classified in the investing category;
(e) profit or loss before income taxes; and
(f) profit or loss from continuing operations.
119 An entity shall presume that a subtotal of income and expenses that it uses in public communications outside its financial statements communicates to users of financial statements management’s view of an aspect of the financial performance of the entity as a whole, unless, applying paragraph 120, the entity rebuts the presumption.
120 An entity is permitted to rebut the presumption described in paragraph 119 and assert that a subtotal does not communicate management’s view of an aspect of the financial performance of the entity as a whole, but only if it has reasonable and supportable information available that demonstrates the basis for the assertion (see paragraphs B124–B131).

Disclosure of management-defined performance measures

121 The objective of the disclosures for management-defined performance measures is for an entity to provide information to help a user of financial statements understand:
(a) the aspect of financial performance that, in management’s view, is communicated by a management-defined performance measure; and
(b) how the management-defined performance measure compares with the measures defined by Australian Accounting Standards.
122 An entity shall disclose information about all measures that meet the definition of management-defined performance measures in paragraph 117 in a single note (see paragraphs B132–B133). This note shall include a statement that the management-defined performance measures provide management’s view of an aspect of the financial performance of the entity as a whole and are not necessarily comparable with measures sharing similar labels or descriptions provided by other entities.
123 An entity shall label and describe each management-defined performance measure in a clear and understandable manner that does not mislead users of financial statements (see paragraphs B134–B135). For each management-defined performance measure, the entity shall disclose:
(a) a description of the aspect of financial performance that, in management’s view, is communicated by the management-defined performance measure. This description shall include explanations of why, in management’s view, the management-defined performance measure provides useful information about the entity’s financial performance.
(b) how the management-defined performance measure is calculated.
(c) a reconciliation between the management-defined performance measure and the most directly comparable subtotal listed in paragraph 118 or total or subtotal specifically required to be presented or disclosed by Australian Accounting Standards (see paragraphs B136–B140).
(d) the income tax effect (determined by applying paragraph B141) and the effect on non-controlling interests for each item disclosed in the reconciliation required by (c).
(e) a description of how the entity applies paragraph B141 to determine the income tax effect required by (d).
124 If an entity changes how it calculates a management-defined performance measure, adds a new management-defined performance measure, ceases using a previously disclosed management-defined performance measure or changes how it determines the income tax effects of the reconciling items required by paragraph 123(d), it shall disclose:
(a) an explanation that enables users of financial statements to understand the change, addition or cessation and its effects.
(b) the reasons for the change, addition or cessation.
(c) restated comparative information to reflect the change, addition or cessation unless it is impracticable to do so. An entity’s selection of a management-defined performance measure is not an accounting policy choice. Nonetheless, in assessing whether restating the comparative information is impracticable, an entity shall apply the requirements in paragraphs 50–53 of AASB 108.
125 If an entity does not disclose the restated comparative information required by paragraph 124(c) because it is impracticable to do so, it shall disclose that fact.

Capital

126 An entity shall disclose in the notes information that enables users of financial statements to evaluate the entity’s objectives, policies and processes for managing capital.

127 To comply with paragraph 126 an entity shall disclose in the notes:
(a) qualitative information about its objectives, policies and processes for managing capital, including:
(i) a description of what it manages as capital;
(ii) when an entity is subject to externally imposed capital requirements, the nature of those requirements and how those requirements are incorporated into the management of capital; and
(iii) how it is meeting its objectives for managing capital.
(b) summary quantitative data about what it manages as capital. Some entities regard some financial liabilities (for example, some forms of subordinated debt) as part of capital. Other entities regard capital as excluding some components of equity (for example, components arising from cash flow hedges).
(c) any changes in (a) and (b) from the preceding reporting period.
(d) whether during the reporting period it complied with any externally imposed capital requirements to which it is subject.
(e) when it has not complied with such externally imposed capital requirements, the consequences of such non-compliance.
128 An entity shall base the note disclosures in paragraph 127 on the information provided internally to key management personnel.
129 An entity may manage capital in a number of ways and be subject to a number of different capital requirements. For example, a conglomerate may include entities that undertake insurance activities and banking activities and those entities may operate in several jurisdictions. When an aggregate disclosure of capital requirements and how capital is managed would not provide useful information or would distort a financial statement user’s understanding of an entity’s capital resources, the entity shall disclose separate information for each capital requirement to which the entity is subject.
AusCF129.1 In respect of AusCF entities, an entity that is required to prepare financial reports in accordance with Part 2M.3 of the Corporations Act and that is not a reporting entity need not present the disclosures required by paragraphs 126–129.
AusCF129.2 Notwithstanding paragraph AusCF129.1, in respect of AusCF entities, a not-for-profit entity need not present the disclosures required by paragraphs 126–129.

130 An entity shall either present in the statement of financial position or the statement of changes in equity or disclose in the notes:
(a) for each class of share capital:
(i) the number of shares authorised;
(ii) the number of shares issued and fully paid, and issued but not fully paid;
(iii) par value per share, or a statement that the shares have no par value;
(iv) a reconciliation of the number of shares outstanding at the beginning and at the end of the reporting period;
(v) the rights, preferences and restrictions attaching to that class, including restrictions on the distribution of dividends and the repayment of capital;
(vi) shares in the entity held by the entity or by its subsidiaries or associates; and
(vii) shares reserved for issue under options and contracts for the sale of shares, including terms and amounts; and
(b) a description of the nature and purpose of each reserve within equity.
131 An entity without share capital, such as a partnership or trust, shall disclose information equivalent to that required by paragraph 130(a), showing changes during the reporting period in each category of equity interest, and the rights, preferences and restrictions attaching to each category of equity interest.