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  • Illustrative IFRS consolidatedfinancial statements for 2012 year ends

    Global Accounting Consulting ServicesPricewaterhouseCoopers LLP

    Published by

  • Bloomsbury Professional, an imprint of Bloomsbury Publishing Plc, Maxwelton House,4143 Boltro Road, Haywards Heath, West Sussex, RH16 1BJ

    This book has been prepared for general guidance on matters of interest only, and does notconstitute professional advice. You should not act upon the information contained in this bookwithout obtaining specific professional advice. Accordingly, to the extent permitted by law,PricewaterhouseCoopers LLP (and its members, employees and agents) and publisher accept noliability, and disclaim all responsibility, for the consequences of you or anyone else acting, orrefraining from acting, in reliance on the information contained in this document or for any decisionbased on it, or for any consequential, special or similar damages even if advised of the possibilityof such damages.

    All rights reserved. No part of this publication may be reproduced in any material form (includingphotocopying or storing it in any medium by electronic means and whether or not transiently orincidentally to some other use of this publication) without the written permission ofPricewaterhouseCoopers LLP except in accordance with the provisions of the Copyright, Designsand Patents Act 1988 or under the terms of a licence issued by the Copyright Licensing AgencyLtd, Saffron House, 610 Kirby Street, London EC1 N 8TS. Applications for the copyright ownerswritten permission to reproduce any part of this publication should be addressed to the publisher.

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    ISBN 9781780431048

    British Library Cataloguing-in-Publication Data.A catalogue record for this book is available from the British Library.

    # 2012 PricewaterhouseCoopers

    Printed in Great Britain

  • IFRS GAAP plc year ended 31 December 2012

    PwC Illustrative IFRS consolidated financial statements for 2012 year ends iii

  • iv PwC Illustrative IFRS consolidated financial statements for 2012 year ends

  • Introduction

    This publication provides an illustrative set of consolidated financial statements,prepared in accordance with International Financial Reporting Standards (IFRS), for afictional manufacturing, wholesale and retail group (IFRS GAAP plc).

    IFRS GAAP plc is an existing preparer of IFRS consolidated financial statements;IFRS 1, First-time adoption of International Financial Reporting Standards, is notapplicable. Guidance on financial statements for first-time adopters of IFRS is availableat www.pwc.com/ifrs

    This publication is based on the requirements of IFRS standards and interpretations forfinancial years beginning on or after 1 January 2012.

    PwC commentary has been provided, in grey boxes, to explain the detail behind thepresentation of a number of challenging areas. We draw your attention in particular toour commentary on the income statement, statement of comprehensive income,balance sheet, statement of changes in equity, statement of cash flows, statement ofsignificant accounting policies and financial risk management.

    Areas in which we have made significant changes to presentation since 2011 havebeen highlighted in pink.

    We have attempted to create a realistic set of financial statements for a corporate entity.However, by necessity we illustrate disclosures that for many entities may beimmaterial. Determining the level of disclosure is a matter of judgement, and naturallydisclosure of immaterial items is not required. Certain types of transaction have beenexcluded, as they are not relevant to the groups operations. The example disclosures,if material, for some of these additional items have been included in appendix III. Theforthcoming IFRS requirements are outlined in a table in appendix IV.

    The example disclosures should not be considered the only acceptable form ofpresentation. The form and content of each reporting entitys financial statements arethe responsibility of the entitys management. Alternative presentations to thoseproposed in this publication may be equally acceptable if they comply with the specificdisclosure requirements prescribed in IFRS.

    These illustrative financial statements are not a substitute for reading the standards andinterpretations themselves or for professional judgement as to fairness of presentation.They do not cover all possible disclosures that IFRS requires. Further specificinformation may be required in order to ensure fair presentation under IFRS. Werecommend that readers refer to our publication IFRS disclosure checklist 2012.

    PwC Illustrative IFRS consolidated financial statements for 2012 year ends v

  • Abbreviations

    IFRS1p37 = International Financial Reporting Standard [number], paragraphnumber.

    7p22 = International Accounting Standards [number], paragraph number.

    SIC-15p5 = Standing Interpretations Committee [number], paragraph number.

    DV = Disclosure Voluntary. Disclosure is encouraged but not required andtherefore represents best practice.

    vi PwC Illustrative IFRS consolidated financial statements for 2012 year ends

  • Contents

    PageFinancial statements ..................................................................................................... 1Notes to the consolidated financial statements: .................................................... 191 General information ............................................................................................... 192 Summary of significant accounting policies: ....................................................... 19

    2.1 Basis of preparation .................................................................................. 192.2 Consolidation ............................................................................................. 212.3 Segment reporting ..................................................................................... 232.4 Foreign currency translation ...................................................................... 232.5 Property, plant and equipment .................................................................. 242.6 Intangible assets ....................................................................................... 252.7 Impairment of non-financial assets ........................................................... 262.8 Non-current assets (or disposal groups) held for sale .............................. 272.9 Financial assets ........................................................................................ 272.10 Offsetting financial instruments ................................................................. 282.11 Impairment of financial assets ................................................................... 282.12 Derivative financial instruments and hedging activities ............................. 292.13 Inventories ................................................................................................. 312.14 Trade receivables ...................................................................................... 312.15 Cash and cash equivalents ....................................................................... 312.16 Share capital ............................................................................................. 312.17 Trade payables ......................................................................................... 312.18 Borrowings ................................................................................................ 322.19 Borrowing costs ......................................................................................... 322.20 Compound financial instruments ............................................................... 322.21 Current and deferred income tax .............................................................. 332.22 Employee benefits ..................................................................................... 332.23 Share-based payments ............................................................................. 352.24 Provisions .................................................................................................. 362.25 Revenue recognition ................................................................................. 362.26 Interest income .......................................................................................... 372.27 Dividend income ........................................................................................ 372.28 Leases ....................................................................................................... 372.29 Dividend distribution .................................................................................. 382.30 Exceptional items ...................................................................................... 38

    3 Financial risk management ................................................................................... 414 Critical accounting estimates and judgements .................................................... 545 Segment information ............................................................................................. 576 Exceptional items ................................................................................................... 617 Other income ......................................................................................................... 628 Other (losses)/gains net ..................................................................................... 629 Expenses by nature ...............................................................................................