36-2 Explanation

An entity must normally present a classified statement of financial position, separating current and
noncurrent assets and liabilities. Only if a presentation based on liquidity provides information that is
reliable and more relevant may the current/noncurrent split be omitted.

In accordance with the revised PAS 1 par. 66, an entity shall classify aa asset as current when:

(a) it expects to realize the asset, or intends to sell or consume it, in its normal operatıng cycle;

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

(c) it expects to realize the asset writhin twelve months after the reporting period; or

(d) the asset is cash or a cash equivalent (as defined in PAS 7) unless the asset is restricted from being
exchanged or used to settle a liability for at least twelve months after the reporting pperio.

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

According to paragraph 54 further that as a minimum, the statement of financial position shall include
line items that present the following amounts:

a) Property, plant and equipment;

b) Investment property;

c) Intangible assets;

d) Financial assets (excluding amount shown under (e), (h) and (I);

e) Investment accounted for using the equity method;

f) Biological assets;

g) Inventories;

h) Trade and other receivables;

i) Cash and Cash Equivalents

j) The total of assets classified as held for sale and assets included in disposal groups classified
as held for sale in accordance with PFRS 5;

k) Trade and other payables;

l) Provisions;

m) Financial liabilities (excluding amounts shown under (k) and (l)) ;

o) Deferred tax liabilities and deferred tax assets, as defined in PAS 12;

p) Liabilities included in disposal groups classified as held for sale in accordance with PFRS 5;

q) Non-controlling interest, presented within equity; and

r) Issued capital and reserves attributable to owners of the parent.

Additional line items may be needed to fairly present the entity’s financial position. (PAS 1 par. 55)

In accordance with the reuised PAS 1 par. 69, an entity shali classify a liability as current when:

(a) it expects to settle the liability in its normal operating cycle;

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

(c) the liability is due to be settled within twelve months after the reporting period; or

(d) the entity does not have an unconditional right to defer settlement of the liability for at least twelve
months after the reporting period.

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

When an entity presents current and non-current assets and liabilities as separate classifications on the
face of the statement of financial position, it shall not classify deferred tax assets (liabilities) as current
assets (liabilities).

The bank overdraft is not "netted" against the cash in bank but shall be classified as current liability.

The cash surrender value is a noncurrent investment.

The selling price of the unsold goods out on consignment is excluded from accounts receivable but the
cost of the goods shall be included in inventory. The cost of Goods out on consignment is 450,000
divided by 125% or 360,000.

36-3 Explanation

An entity must normally present a classified statement of financial position, separating current and
noncurrent assets and liabilities. Only if a presentation based on liquidity provides information that is
reliable and more relevant may the current/noncurrent split be omitted.

In accordance with the revised PAS 1 par. 66, an entity shall classify aa asset as current when:

(a) it expects to realize the asset, or intends to sell or consume it, in its normal operatıng cycle;
(b) it holds the asset primarily for the purpose of trading;

(c) it expects to realize the asset writhin twelve months after the reporting period; or

(d) the asset is cash or a cash equivalent (as defined in PAS 7) unless the asset is restricted from being
exchanged or used to settle a liability for at least twelve months after the reporting pperio.

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

According to paragraph 54 further that as a minimum, the statement of financial position shall include
line items that present the following amounts:

a) Property, plant and equipment;

b) Investment property;

c) Intangible assets;

d) Financial assets (excluding amount shown under (e), (h) and (I);

e) Investment accounted for using the equity method;

f) Biological assets;

g) Inventories;

h) Trade and other receivables;

i) Cash and Cash Equivalents

j) The total of assets classified as held for sale and assets included in disposal groups classified
as held for sale in accordance with PFRS 5;

k) Trade and other payables;

l) Provisions;

m) Financial liabilities (excluding amounts shown under (k) and (l)) ;

n) Liabilities and assets for current tax, as defined in PAS 12;

o) Deferred tax liabilities and deferred tax assets, as defined in PAS 12;

p) Liabilities included in disposal groups classified as held for sale in accordance with PFRS 5;

q) Non-controlling interest, presented within equity; and

r) Issued capital and reserves attributable to owners of the parent.

Additional line items may be needed to fairly present the entity’s financial position. (PAS 1 par. 55)
In accordance with the reuised PAS 1 par. 69, an entity shali classify a liability as current when:

(a) it expects to settle the liability in its normal operating cycle;

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

(c) the liability is due to be settled within twelve months after the reporting period; or

(d) the entity does not have an unconditional right to defer settlement of the liability for at least twelve
months after the reporting period.

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

When an entity presents current and non-current assets and liabilities as separate classifications on the
face of the statement of financial position, it shall not classify deferred tax assets (liabilities) as current
assets (liabilities).

Under PAS 1 and PAS 12, deferred tax liability shall be classified as non-current.

In the absence of any contrary statement, the bonds payable plus the premium on bonds payable shall
be classified noncurrent.

The stock dividend payable is not an accounting liability but presented as part of Shareholders' equity as
an addition to share capital.