Presentation and disclosure as communication tools
A reporting entity communicates
information about its assets, liabilities,
equity, income and expenses by presenting and disclosing information in its
financial statements.
Effective communication of information in financial
statements makes that
information more relevant and contributes to a faithful representation of an
entity’s assets, liabilities, equity, income and expenses.
It also enhances the
understandability and comparability of information in financial statements.
Effective communication of information in financial statements requires:
(a)
focusing on presentation and disclosure objectives and principles
rather than focusing on rules;
(b)
classifying information in a manner that
groups similar items and
separates dissimilar items; and
(c)
aggregating information in such a way that it is not obscured either by
unnecessary detail or by excessive aggregation.
Just as cost constrains other
financial reporting decisions, it also constrains
decisions about presentation and disclosure. Hence, in making decisions about
presentation
and disclosure, it is important to consider whether the benefits
provided to users of financial statements by presenting or disclosing particular
information are likely to justify the costs
of providing and using that
information.
Dostları ilə paylaş: 
