字幕表 動画を再生する 英語字幕をプリント [MUSIC PLAYING] Hi. [INAUDIBLE] here. And in this video, we'll be exploring the Statement of Financial Position under IFRS. Before we move forward, though, let's review. Public corporations in Canada use IFRS, International Financial Reporting Standards. IFRS requires them to produce five statements-- the Income Statement, Statement of Comprehensive Income, Statement of Changes in Equity, Statement of Financial Position, and Statement of Cash Flows. Today we'll focus on the Statement of Financial Position, but let's review the previous statements and the interconnection. The first financial statement produced is the Income Statement. This statement measures a company's performance. The profit or loss from the Income Statement is used in multiple other statements. But right now, let's focus on the fact that the profit or loss is carried forward to the Statement of Comprehensive Income. This statement adds or deducts unrealized gains or losses to provide a broader definition of a company's performance, one that includes both realized and unrealized amounts. The unrealized gains or losses on the Statement of Comprehensive Income are then carried forward to the Statement of Changes in Equity. This statement reports how profits, dividends, shares, and other items have affected shareholders' equity. Remember I said that the profit or loss from the Income Statement is used in multiple other statements? You saw that it was used as the opening number in the Statement of Comprehensive Income. Here, it's used in the Retained Earnings column. The ending balances from the Statement of Changes in Equity are then transferred to the Statement of Financial Position, the subject of this video. The Statement of Financial Position summarizes the assets owned, the liabilities owed, and the equity investment by the shareholders. This statement shows the financial health of a company at a specific point in time. In order to understand the Statement of Financial Position, we have to first understand the elements that make up this statement-- assets, liabilities, and equity. Let's look at each individually. Everything that a company owns or controls is considered an asset, a resource the company will use in the future. When you look at the assets, you answer the question, what does the company have that they will use in the future to help run the business? Assets are divided into two categories-- current and non-current or long-term. Why? Financial statements are all about communicating useful information to decision-makers by grouping assets based on their characteristics, in this case how fast they are used or converted into cash. Users obtain a better understanding of the company's financial position and health. Let's define those two categories of assets. Current assets are any assets that will be converted into cash, sold, or consumed within one year or operating cycle, whichever is longer. A few of the more common accounts found in this grouping our things like cash and prepaid expenses. Non-current assets are any assets that do not meet the definition of a current asset. These are resources that will be converted into cash, sold, or used up over more than one year. They're divided into five subcategories-- long-term investments; property, plant, and equipment; intangible assets; goodwill; and other assets. In order to better understand the accounts that go into current and non-current assets, I suggest you check out the Financial Statement Element video which lists, defines, and describes all the different accounts under each category. How do companies get their assets? They use liabilities. Companies take on debt and owe third parties either money, goods, or services. Like assets, liabilities are divided into current and non-current, again to provide information to users so they can make decisions. Current liabilities are obligations that will be satisfied in one year or operating cycle, whichever is longer. Current liabilities include accounts such as accounts payable and unearned revenue. Non-current, or long-term liabilities, are debts that will be satisfied beyond one year or operating cycle, whichever is longer. Accounts included in this subcategory almost always have the word payable as part of the account name. Again, to learn more, check out the Financial Statement Elements video which lists, defines, and describes all the different accounts under each category. We already defined the element equity when you completed the Statement of Changes in Equity. Equity is the financing by owners. Recall that it's made up of share capital, retained earnings, and accumulated other comprehensive income. It answers the question, what part of the business is financed by the owners? Let's just review the three items quickly. Share capital represents the amount received in exchange for company's shares. This is a direct investment by the shareholders because shareholders choose to invest in the company by buying shares. Next, the indirect investment called retained earnings. Retained earnings is increased by profit and decreased by dividends paid out to shareholders, as well as losses from the Income Statement. The profit is kept in the business to help them grow in the future. Finally, accumulated other comprehensive income. This is the total of all unrealized gains and losses from the Statement of Comprehensive Income since the company began. This amount is increased by unrealized gains and decreased by unrealized losses. Let's do a quick check of your understanding so far. The right to receive money in the future from a customer is an. Asset called accounts receivable. It is an asset because it will be converted into cash in the future, and it has future economic benefit for the company because it brings in cash. Now that we understand the elements that make up the Statement of Financial Position, we can look at an example. Note that the statement is so large that I've divided it into sections so that you can see them better. As always, the statement starts with the heading, which must include the company name and the title of the financial statement. One change from previous statements-- the Statement of Financial Position is at a point in time, not a period of time. Why? Because every time a company has another transaction, their financial position changes. For example, if you have $10 in your pocket and then you buy a Timmy's, your financial position has changed. That's why the Statement of Financial Position is a snapshot, one second in time. The title of the statement reflects that. In this demonstration video, I've followed the common North American practice of listing current items before non-current items. This is called order of liquidity. The order is current assets before non-current and current liabilities before non-current liabilities. Although I have set up the statement in columns for easy viewing, the accounts can all be listed in one column and the amounts in another. Here you see the details of the Current Asset section. Notice that the assets are listed in order of liquidity. The faster I convert them into cash, sell, or use them, the higher they are on the list. Note that there is a subtotal called total current assets. The next section is the Non-current Assets. I have listed them from long-term investment to goodwill. Notice, if there is only one item in the section, there is no subtotal necessary. Intangibles and goodwill are examples of this. If there are more than one item listed under a heading, as there is for long-term investments and property, plant, and equipment, there must be a subtotal. The next section is called Liabilities and Shareholders' Equity. I've started with current liabilities and provided a subtotal before moving on to non-current liabilities. Note, each section has its own subtotal, and then total liabilities is provided at the bottom. The accounts within current and non-current liabilities are an order of when they will be settled. The earlier they're settled, the higher they are on the listing. The final section is Shareholders' Equity. Notice that the order of shareholders' equity items-- common shares, retained earnings, and accumulated other comprehensive income-- are the same as the order of the columns in the Statement of Changes in Equity. There is a subtotal for shareholders' equity before total liabilities and shareholders' equity is provided. Notice something really important. Total assets are equal to total liabilities plus shareholders' equity. This is called the accounting equation. This equation shows that economic resources-- that's our assets-- are financed either through debt or liabilities or equity from shareholders. This equation will be explored in a later video. For now, it's important to recognize that in the Statement of Financial Position assets always equals liabilities plus shareholders' equity. Let's check your understanding. Shareholders' equity is always placed after liabilities on the Statement of Financial Position under IFRS. You likely said true, but the correct answer is actually false. IFRS allows choice with regards to the order of the categories on the Statement of Financial Position. It's common in North America to use order of liquidity, which is what I've used in the statements I demonstrated. More common for international and European corporations is reverse liquidity order. On these statements, non-current assets are listed first, then current assets. In addition, shareholders' equity is actually listed before liabilities, and liabilities are in reverse order, meaning that it's non-current liabilities before current liabilities. Within each category, the accounts are also listed in reverse order. That means that under current assets cash would be last, not first. It's important to understand that IFRS provides choice. But for purposes of these videos, we'll continue to use order of liquidity, which is most common in North American companies. So what questions does the Statement of Financial Position answer? For investors, it shows that the company can repay its current and non-current debt as they come due. For creditors, it indicates if there's enough assets to operate. If they can't operate, is there enough assets to cover outstanding debts when they're sold? Does the company have enough cash to pay its debts as they come due? Considering current debt levels, should we lend them more money? For both investors and lenders, it answers the question, what does the company use, debt or equity financing? The Statement of Financial Position is not the last financial statement we're going to complete.