VALUE IFRS PlcIllustrative IFRS consolidatedfinancial statementsDecember 2019
This publication presents the sample annual financial reports of a fictional listed company, VALUE IFRS Plc. Itillustrates the financial reporting requirements that would apply to such a company under InternationalFinancial Reporting Standards as issued at 31 May 2019. Supporting commentary is also provided. For thepurposes of this publication, VALUE IFRS Plc is listed on a fictive Stock Exchange and is the parent entity in aconsolidated entity.VALUE IFRS Plc 2019 is for illustrative purposes only and should be used in conjunction with the relevantfinancial reporting standards and any other reporting pronouncements and legislation applicable in specificjurisdictions.Global Accounting Consulting ServicesPricewaterhouseCoopers LLPThis content is for general information purposes only, and should not be used as a substitute forconsultation with professional advisors.About PwCAt PwC, our purpose is to build trust in society and solve important problems. We're a network of firmsin 158 countries with more than 250,000 people who are committed to delivering quality in assurance,advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com 2019 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each ofwhich is a separate legal entity. Please see www.pwc.com/structure for further details.
VALUE IFRS PlcIllustrative IFRS consolidated financial statementsDecember 2019Financial statements6Statement of profit or lossStatement of comprehensive incomeBalance sheetStatement of changes in equityStatement of cash flowsNotes to the financial statements27Significant changes in the current reporting period29How numbers are calculated30Segment informationProfit and lossBalance sheetCash flows313652113Group structure143Business combinationDiscontinued operationInterests in other entitiesFurther detailsRelated party transactionsShare-based paymentsEarnings per shareOffsetting financial assets and financial liabilitiesAssets pledged as securityAccounting policiesChanges in accounting policiesIndependent auditor's al estimates, judgements and errorsFinancial risk managementCapital management117120140Unrecognised itemsContingent liabilities and contingent assetsCommitmentsEvents occurring after the reporting period1571581591601621631671721751771781952002012
IntroductionThis publication presents illustrative consolidated financial statements for a fictitious listed company, VALUE IFRS Plc. Thefinancial statements comply with International Financial Reporting Standards (IFRS) as issued at 31 May 2019 and thatapply to financial years commencing on or after 1 January 2019.We have attempted to create a realistic set of financial statements for VALUE IFRS Plc, a corporate entity that manufacturesgoods, provides services and holds investment property. However, as this publication is a reference tool, we have notremoved any disclosures based on materiality. Instead, we have included illustrative disclosures for as many commonscenarios as possible. Please note that the amounts disclosed in this publication are purely for illustrative purposes and maynot be consistent throughout the publication.New disclosure requirements and changes in accounting policiesMost companies will have to make changes to their disclosures in 2019, to reflect the adoption of IFRS 16 Leases. Thispublication shows how the adoption of the standard may affect a corporate entity. Note 26 provides example disclosureswhich explain the impact of the changes in accounting policy. The new leasing disclosures are illustrated in note 8(b) and innote 8(c). You can find new or revised disclosures by looking for shading in the reference column.In compiling the illustrative disclosures, we have made a number of assumptions in relation to the adoption of IFRS 16. Inparticular, VALUE IFRS Plc: has applied the simplified transition approach and has not restated comparative information does not have any right-of-use assets that would meet the definition of investment property does not have any finance leases as lessor, and did not have to recognise any adjustments in relation to the assets held as lessor under operating leases.For further specific assumptions made, please refer to the commentary to note 26.In addition, we have added comparative information to some of the financial instruments disclosures that were new lastyear and where comparatives were therefore not required (see note 7 and note 12). We have also made a few improvementsto existing disclosures.The other amendments to standards that apply from 1 January 2019 and that are unrelated to the adoption of IFRS 16 areprimarily clarifications, see Appendix D. We have assumed that none of them required a change in VALUE IFRS Plc’saccounting policies. However, this assumption will not necessarily apply to all entities. Where there has been a change inpolicy that has a material impact on the reported amounts, this would also need to be disclosed in note 26.While the IASB issued a revised Conceptual Framework for Financial Reporting in March 2018 which will be usedimmediately by the Board and Interpretations Committee in developing new pronouncements, preparers will onlycommence referring to the new framework from 1 January 2020. We have therefore continued referring to the existingframework in this publication.Early adoption of standardsVALUE IFRS Plc generally adopts standards early if they clarify existing practice but do not introduce substantive changes.These include standards issued by the IASB as part of the improvements programme or the amendments made to IAS 1 andIAS 8 in relation to the definition of material.As required under IFRS, the impacts of standards and interpretations that have not been early adopted and that areexpected to have a material effect on the entity are disclosed in accounting policy note 25(a). A summary of allpronouncements relevant for annual reporting periods ending on or after 31 December 2019 is included in Appendix D. Forupdates after the cut-off date for our publication, see www.pwc.com/ifrs.Using this publicationThe source for each disclosure requirement is given in the reference column. Shading in this column indicates changes madeas a result of new or revised requirements that become applicable for the first time this year. There is also commentary that(i) explains some of the more challenging areas, (ii) lists disclosures that have not been included because they are notrelevant to VALUE IFRS Plc, and (iii) provides additional disclosure examples.The appendices give further information about the operating and financial review (management commentary), alternativeformats for the statement of profit or loss and other comprehensive income and the statement of cash flows, and industryspecific disclosures. A summary of all standards that apply for the first time to annual reports beginning on or after 1January 2019 is included in Appendix D, and abbreviations used in this publication are listed in Appendix E.PwC3
As VALUE IFRS Plc is an existing preparer of IFRS consolidated financial statements, IFRS 1 First-time Adoption ofInternational Financial Reporting Standards does not apply. Guidance on financial statements for first-time adopters ofIFRS is available in Chapter 2 of our Manual of Accounting.The example disclosures are not the only acceptable form of presenting financial statements. Alternative presentations maybe acceptable if they comply with the specific disclosure requirements prescribed in IFRS. Readers may find our IFRSdisclosure checklist 2019 useful to identify other disclosures that may be relevant under the circumstances but are notillustrated in this publication.Some of the disclosures in this publication would likely be immaterial if VALUE IFRS Plc was a ‘real life’ company. Thepurpose of this publication is to provide a broad selection of illustrative disclosures which cover most common scenariosencountered in practice. The underlying story of the company only provides the framework for these disclosures and theamounts disclosed are for illustration purposes only. Disclosures should not be included where they are not relevant or notmaterial in specific circumstances. Guidance on assessing materiality is provided in IAS 1 Presentation of FinancialStatements and the non-mandatory IFRS Practice Statement 2 Making Materiality Judgements.Preparers of financial reports should also consider local legal and regulatory requirements which may stipulate additionaldisclosures that are not illustrated in this publication.FormatThere is a general view that financial reports have become too complex and difficult to read and that financial reportingtends to focus more on compliance than communication. At the same time, users’ tolerance for sifting through informationto find what they need continues to decline. This has implications for the reputation of companies who fail to keep pace. Aglobal study confirmed this trend, with the majority of analysts stating that the quality of reporting directly influenced theiropinion of the quality of management.To demonstrate what companies could do to make their financial report more relevant, we have ‘streamlined’ the financialreport to reflect some of the best practices that have been emerging globally over the past few years. In particular: Information is organised to clearly tell the story of financial performance and make critical information moreprominent and easier to find. Additional information is included where it is important for an understanding of the performance of the company.For example, we have included a summary of significant transactions and events as the first note to the financialstatements even though this is not a required disclosure.Accounting policies that are significant and specific to the entity are disclosed along with other relevant information,generally in the section ‘How the numbers are calculated’. While we have still listed other accounting policies in note 25, thisis for completeness purposes. Entities should consider their own individual circumstances and only include policies that arerelevant to their financial statements.The structure of financial reports should reflect the particular circumstances of the company and the likely priorities of itsreport readers. There is no “one size fits all” approach and companies should engage with their investors to determine whatwould be most relevant to them. The structure used in this publication is not meant to be used as a template, but to provideyou with possible ideas. It will not necessarily be suitable for all companies.Specialised companies and industry-specific requirementsVALUE IFRS Plc does not illustrate the disclosures specifically relevant to specialised industries. However, Appendix Cprovides an illustration and explanation of the disclosure requirements of IFRS 6 Exploration for and Evaluation ofMineral Resources and IAS 41 Agriculture. Further examples of industry-specific accounting policies and other relevantdisclosures can be found in the following PwC publications: Illustrative IFRS financial statements – Investment funds Illustrative IFRS consolidated financial statements – Investment property Illustrative IFRS financial statements – Private equity funds IFRS 9 for banks – Illustrative disclosures Illustrative IFRS consolidated financial statements– InsurancePwC4
PwC Manual of Accounting – IFRSFor further insights on the application of the IFRS refer to the PwC Manual of Accounting which can beaccessed through our Inform website (link will only work for registered users). Each chapter has a series offrequently asked questions which provide useful guidance on particular aspects of each accounting standard.PwC5
IAS1(49),(51)(a)VALUE IFRS PlcAnnual financial report – 31 December 2019 1-11IAS1(49)Financial statementsConsolidated statement of profit or loss9Consolidated statement of comprehensive income10Consolidated balance sheet17Consolidated statement of changes in equity21Consolidated statement of cash flows24Notes to the financial statements27IAS1(51)(b),(d)These financial statements are consolidated financial statements for the group consisting of VALUEIFRS Plc and its subsidiaries. A list of major subsidiaries is included in note 16.The financial statements are presented in the Oneland currency (CU).IAS1(138)(a)VALUE IFRS Plc is a company limited by shares, incorporated and domiciled in Oneland. Itsregistered office and principal place of business is:VALUE IFRS Plc350 Harbour Street1234 Nice TownIAS10(17)The financial statements were authorised for issue by the directors on 23 February 2020. Thedirectors have the power to amend and reissue the financial statements.All press releases, financial reports and other information are available at our Shareholders’ Centreon our website: www.valueifrsplc.comPwC6
Financial statementsAccounting standard for financial statements presentation and disclosuresIAS1(10)According to IAS 1 Presentation of Financial Statements, a ‘complete set of financialstatements’ comprises:(a) a statement of financial position as at the end of the period(b) a statement of profit or loss and other comprehensive income for the period(c) a statement of changes in equity for the period(d) a statement of cash flows for the period(e) notes, comprising a summary of significant accounting policies and other explanatorynotes, and(f) if the entity has applied an accounting policy retrospectively, made a retrospectiverestatement of items or has reclassified items in its financial statements: a statement offinancial position as at the beginning of the earliest comparative period.IAS1(10)The titles of the individual statements are not mandatory and an entity can, for examplecontinue to refer to the statement of financial positio
year and where comparatives were therefore not required (see note 7 and note 12). We have also made a few improvements to existing disclosures. The other amendments to standards that apply from 1 January 2019 and that are unrelated to the adoption of IFRS 16 are primarily clarifications, see Appendix D. We have assumed that none of them required a change in VALUE IFRS Plc’s accounting .