Section 3: Statement of Financial Position (AASB1061_04-26)

This section sets out the information to be presented in a statement of financial position and how to present it. The statement of financial position (sometimes called the balance sheet) presents an entity’s assets, liabilities and equity as of a specific date – the reporting date.

The statement of financial position shall include line items that present the following amounts when those amounts are material to an understanding of the entity’s financial position: 

(a) cash and cash equivalents; 

(b) trade and other receivables (‘debtors’); 

(c) financial assets (excluding amounts shown under (a), (b), (h) and (i)); 

(d) inventories; 

(e) property, plant and equipment; 

(f) investment property; 

(g) intangible assets; 

(h) investments in associates; 

(i) investments in joint ventures; 

(j) trade and other payables (‘creditors’); 

(k) financial liabilities (excluding amounts shown under (j) and (m)); 

(l) liabilities and assets for current tax; 

(m) provisions; 

(n) non-controlling interests, presented within equity separately from the equity attributable to the owners of the parent; and 

(o) equity attributable to the owners of the parent.

An entity shall present additional line items, headings and subtotals in the statement of financial position when such presentation is relevant to an understanding of the entity’s financial position. An entity that presents investments in notable relationship entities shall include this as a line item instead of the line items noted in paragraphs 3.2(h) and (i).

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 3.5 and 3.6.

An entity shall classify an asset as current when: 

(a) it expects to convert the asset to cash (eg by selling it), or consume it, within twelve months after the reporting date; 

(b) it holds the asset primarily for the purpose of trading; or 

(c) the asset is cash or a cash equivalent, unless it is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting date. 

An entity shall classify all other assets as non-current.

An entity shall classify a liability as current when: 

(a) the liability is due to be settled within twelve months after the reporting date; 

(b) it holds the liability primarily for the purpose of trading; or 

(c) the entity does not have the right to defer settlement of the liability for at least twelve months after the reporting date. 

An entity shall classify all other liabilities as non-current.

This Standard does not prescribe the sequence or format in which items are to be presented. In addition, the descriptions used and the sequencing of items or aggregation of similar items may be amended according to the nature of the entity and its transactions, to provide information relevant to an understanding of the entity’s financial position.

An entity shall disclose, either in the statement of financial position or in the notes, further subclassifications of the line items presented when those amounts are material to an understanding of the entity’s financial position, classified in a manner appropriate to the entity’s operations. This includes, for example: 

(a) for property, plant and equipment, showing classifications appropriate to the entity; 

(b) for trade and other receivables, showing separately amounts due from related parties from those due from other parties; 

(c) for inventories, showing separately amounts of inventories: 

(i) held for sale or distribution in the ordinary course of operations; 

(ii) in the process of production for such sale or distribution; and 

(iii) in the form of materials or supplies to be consumed in the production process or in the rendering of services; 

(d) for trade and other payables, showing separately amounts payable to trade suppliers from those payable to related parties; 

(e) showing deferred revenue obligations separately from other liabilities; 

(f) for provisions, showing provisions for employee benefits separately from other provisions; and 

(g) disaggregating equity into its classes, such as contributed capital, retained earnings, reserves and items of income and expense that, as permitted or required by this Standard, are recorded in other comprehensive income and presented separately in equity (including any revaluation surplus).

An entity shall disclose the amount of contributed capital and changes in its amount during the period, and the rights and any restrictions attaching to contributed capital at the reporting date. These disclosures apply to entities with share capital and entities with any other form of contributed capital, such as partnerships or trusts.

In applying paragraph 3.6, if an entity classifies liabilities arising from loan arrangements as non-current although the entity’s right to defer settlement of those liabilities is subject to the entity complying with covenants within twelve months after the reporting date, the entity shall disclose information in the notes that enables users of financial statements to understand the risk that the liabilities could become repayable within twelve months after the reporting date, including: 

(a) information about the covenants (including the nature of the covenants and when the entity is required to comply with them) and the carrying amount of related liabilities; and 

(b) any facts and circumstances that indicate the entity might have difficulty complying with the covenants – for example, the entity having acted during or after the reporting period to avoid or mitigate a potential breach. Such facts and circumstances could also include the fact that the entity would not have complied with the covenants if they were to be assessed for compliance based on the entity’s circumstances at the reporting date.