1 / 11

By Larry L. Perry, CPA CPA Firm Support Services, LLC

Financial Reporting Framework for Small- and Medium-Sized Entities Series: Part 1--Statement of Financial Position. By Larry L. Perry, CPA CPA Firm Support Services, LLC. Learning Objectives. To learn the presentation concepts for the statement of financial position under the FRF for SMEs.

buffy-floyd
Download Presentation

By Larry L. Perry, CPA CPA Firm Support Services, LLC

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Financial Reporting Framework for Small- and Medium-Sized Entities Series: Part 1--Statement of Financial Position By Larry L. Perry, CPA CPA Firm Support Services, LLC www.cpafirmsupport.com

  2. Learning Objectives • To learn the presentation concepts for the statement of financial position under the FRF for SMEs. • To understand the basic principles in the FRF for SMEs for presentations and disclosure of current assets and liabilities. • To learn alternative presentations of the statement of financial position. www.cpafirmsupport.com

  3. A Non-Authoritative, Special-Purpose Framework • A combination of traditional accounting methods from special purpose frameworks such as the cash basis and the income tax basis. • A historical cost basis with some modifications for market values. • Specific, simplified footnote disclosures. • Uncomplicated, consistent and principles-based accounting. • A consolidation model that excludes variable interest entities. • Management and the users of financial statements decide if it fairly presents an entity’s financial position and results of operations. www.cpafirmsupport.com

  4. Basic Financial Statement Titles • For the FRF for SMEs, other common financial statement titles are: • Statement of Assets, Liabilities and Equity • Statement of Revenues and Expenses • Statement of Cash Flows • Notes to Financial Statements • Other descriptive titles may also be used. www.cpafirmsupport.com

  5. Presentation of Statement of Financial Position • Alternative descriptive titles of the statement may be used (avoid conflicts with U.S. GAAP). • Basis of preparation (FRF for SMEs) should be clearly disclosed. • Comparative statements are considered most meaningful but not required (single period presentation may be most cost-beneficial in first period). • A classified statement should be used. • Reference to an independent accountant’s report and notes to financial statement is required. www.cpafirmsupport.com

  6. Current Assets Accounting Issues • Cash and cash equivalents • Accounts and notes receivable • Inventories • Prepaid expenses • Deferred income tax assets • Refundable income taxes • Costs and estimated earnings in excess of billings on uncompleted contracts www.cpafirmsupport.com

  7. Current Liabilities Accounting Issues • Current portion of LTD and capital lease obligations • Short term loans and notes payable • Trade accounts payable • Accrued expenses • Current income taxes payable • Deferred income taxes liabilities (current portion) • Deferred revenues (current portion) • Billings in excess of costs and estimated earnings on uncompleted contracts www.cpafirmsupport.com

  8. Other Accounting Issues • Financial assets and liabilities are recognized at the time of a transaction or contract. • Derivatives arrangements are disclosed and recognized upon settlement. • Assets and liabilities may be offset when legal right exists. • Transfers of financial assets are de-recognized when control ceases; liabilities when payment is made or satisfied otherwise. www.cpafirmsupport.com

  9. Disclosures for Financial Assets and Liabilities • Carrying amounts should be disclosed separately. • Amounts due to or from related parties should be disclosed separately. • Long-term receivables and payables due beyond one year should be presented separately. • Transfers of financial assets—see text. • Long-term obligations—see text. • Derivatives—see text. • Income—see text. www.cpafirmsupport.com

  10. Statement of Assets, Liabilities and Equity (Statement of Financial Position) • See the illustrative statement and related footnotes in the text. • The AICPA has provided illustrative, detailed statements in its Tool Kits at www.aicpa.org. • To use the FRF for SMEs: • Management and users of an entity’s financial statements must agree on the framework. • The FRF should be an appropriate presentation of financial position and results of operations for the entity. www.cpafirmsupport.com 3/26/2014

  11. The End • What to do if you want more • Email Larry Perry: larry@cpafirmsupport.com with questions • Visit www.cpafirmsupport.com for webcast resources • Register for free email newsletter on CPA Firm Support website • Read Larry Perry’s weekly articles/blog, Today’s World of Audits, at www.accountingweb.com under the A&A Articles and Blog tabs for accounting and auditing subjects for small- and medium-sized entities www.cpafirmsupport.com

More Related