Presentation of Financial Statements and Fair Value Measurement
Presentation (IAS 1)
A complete set of financial statements comprises the statement of financial position, statement(s) of profit or loss and other comprehensive income, statement of changes in equity, statement of cash flows and notes, with comparatives. The going concern and accrual assumptions underpin everything; presentation must reflect materiality and aggregation, prohibit offsetting and be consistent period to period. The current/non-current split is required unless a liquidity presentation is more relevant and reliable.
Trap: a loan is current unless the entity has an unconditional right at the reporting date to defer settlement for at least twelve months. A covenant breach at year-end makes the loan current even if a waiver is agreed before the statements are authorised; a waiver obtained before year-end keeps it non-current. A breach occurring after the reporting date does not reclassify.
Fair value (IFRS 13)
Fair value is the price received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date - an exit price, not an entity-specific value and not historical cost. Use the principal market (most advantageous only where no principal market exists), apply highest and best use for non-financial assets, exclude transaction costs, include transport costs and ignore blockage factors. Level 1 inputs are quoted prices in active markets, Level 2 observable inputs, Level 3 unobservable inputs. The hierarchy drives disclosure and evidence, not the measurement objective.
Worked example: listed shares subject to a six-month lock-up. The quoted price is a Level 1 input, but a market-participant discount for the restriction is applied - the instrument is still at fair value and may be disclosed as Level 2 if the adjustment uses observable inputs.