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Offsetting
32. Assets and
liabilities, and income and expenses, shall not be offset
unless required or permitted by a Standard or an
Interpretation.
33. It is important
that assets and liabilities, and income and expenses, are
reported separately. Offsetting in the income statement or the
balance sheet, except when offsetting reflects the substance
of the transaction or other event, detracts from the ability
of users both to understand the transactions, 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 doubtful debts allowances on receivables—is
not offsetting.
34. IAS 18 Revenue
defines revenue and requires it to be measured at the fair
value of the consideration received or receivable, taking into
account the amount of any trade discounts and volume rebates
allowed by the entity. An entity undertakes, in the course of
its ordinary activities, other transactions that do not
generate revenue but are incidental to the main
revenue-generating activities. The results of such
transactions are presented, when this presentation reflects
the substance of the transaction or other event, by netting
any income with related expenses arising on the same
transaction. For example:
(a) gains and losses
on the disposal of non-current assets, including investments
and operating assets, are reported by deducting from the
proceeds on disposal the carrying amount of the asset and
related selling expenses; and
(b) expenditure
related to a provision that is recognised in accordance with
IAS 37 Provisions, Contingent Liabilities and Contingent
Assets and reimbursed under a contractual arrangement with
a third party (for example, a supplier’s warranty agreement)
may be netted against the related reimbursement.
35. In addition,
gains and losses arising from a group of similar transactions
are reported on a net basis, for example, foreign exchange
gains and losses or gains and losses arising on financial
instruments held for trading. Such gains and losses are,
however, reported separately if they are material.
Comparative
Information
36. Except when a
Standard or an Interpretation permits or requires otherwise,
comparative information shall be disclosed in respect of
the previous period for all amounts reported in the
financial statements. Comparative information
shall be included for narrative and descriptive
information when it is relevant to an understanding
of the current period’s financial statements.
37. In some cases,
narrative information provided in the financial statements for
the previous period(s) continues to be relevant in the current
period. For example, details of a legal dispute, the outcome
of which was uncertain at the last balance sheet date and is
yet to be resolved, are disclosed in the current period. Users
benefit from information that the uncertainty existed at the
last balance sheet date, and about the steps that have been
taken during the period to resolve the uncertainty.
38. When the
presentation or classification of items in the financial
statements is amended, comparative amounts shall be
reclassified unless the reclassification is
impracticable. When comparative amounts are
reclassified, an entity shall disclose:
(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.
39. 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.
40. Enhancing the
inter-period comparability of information assists users in
making economic decisions, especially by allowing the
assessment of trends in financial information for predictive
purposes. In some circumstances, it is impracticable to
reclassify comparative information for a particular prior
period to achieve comparability with the current period. For
example, data may not have been collected in the prior
period(s) in a way that allows reclassification, and it may
not be practicable to recreate the information.
41. IAS 8 deals with
the adjustments to comparative information required when an
entity changes an accounting policy or corrects an error.
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