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Illustrative IFRS consolidated

financial statements

December 2019

© 2019 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of

which is a separate legal entity. Please see www.pwc.com/structure for further details.

This publication presents the sample annual financial reports of a fictional listed company, VALUE IFRS Plc. It

illustrates the financial reporting requirements that would apply to such a company under International

Financial Reporting Standards as issued at 31 May 2019. Supporting commentary is also provided. For the

purposes of this publication, VALUE IFRS Plc is listed on a fictive Stock Exchange and is the parent entity in a

consolidated entity.

VALUE IFRS Plc 2019 is for illustrative purposes only and should be used in conjunction with the relevant

financial reporting standards and any other reporting pronouncements and legislation applicable in specific

jurisdictions.

Global Accounting Consulting Services

PricewaterhouseCoopers LLP

This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.

About PwC

At PwC, our purpose is to build trust in society and solve important problems. We're a network of firms

in 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

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Notes to the financial statements 27

Significant changes in the current reporting period 29

Further details 162

Related party transactions 163

Share-based payments 167

Earnings per share 172

Offsetting financial assets and financial liabilities 175

Assets pledged as security 177

Accounting policies 178

Changes in accounting policies 195

Unrecognised items 157

Contingent liabilities and contingent assets 158

Commitments 159

Events occurring after the reporting period 160

Group structure 143

Business combination 144

Discontinued operation 147

Interests in other entities 150

Risk 116

Critical estimates, judgements and errors 117

Financial risk management 120

Capital management 140

How numbers are calculated 30

Segment information 31

Profit and loss 36

Balance sheet 52

Cash flows 113

VALUE IFRS Plc

Illustrative IFRS consolidated financial statements

December 2019

Financial statements 6

Statement of profit or loss 9

Statement of comprehensive income 10

Balance sheet 17

Statement of changes in equity 21

Statement of cash flows 24

Appendices 201

Independent auditor's report 200

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Introduction

This publication presents illustrative consolidated financial statements for a fictitious listed company, VALUE IFRS Plc. The

financial statements comply with International Financial Reporting Standards (IFRS) as issued at 31 May 2019 and that

apply 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 manufactures

goods, provides services and holds investment property. However, as this publication is a reference tool, we have not

removed any disclosures based on materiality. Instead, we have included illustrative disclosures for as many common

scenarios as possible. Please note that the amounts disclosed in this publication are purely for illustrative purposes and may

not be consistent throughout the publication. New disclosure requirements and changes in accounting policies

Most companies will have to make changes to their disclosures in 2019, to reflect the adoption of IFRS 16 Leases. This

publication shows how the adoption of the standard may affect a corporate entity. Note 26 provides example disclosures

which explain the impact of the changes in accounting policy. The new leasing disclosures are illustrated in note 8(b) and in

note 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. In

particular, 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 last

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

accounting policies. However, this assumption will not necessarily apply to all entities. Where there has been a change in

policy 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 used

immediately by the Board and Interpretations Committee in developing new pronouncements, preparers will only

commence referring to the new framework from 1 January 2020. We have therefore continued referring to the existing

framework in this publication.

Early adoption of standards

VALUE 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 and

IAS 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 are

expected to have a material effect on the entity are disclosed in accounting policy note 25(a). A summary of all

pronouncements relevant for annual reporting periods ending on or after 31 December 2019 is included in Appendix D. For

updates after the cut-off date for our publication, see www.pwc.com/ifrs.

Using this publication

The source for each disclosure requirement is given in the reference column. Shading in this column indicates changes made

as 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 not

relevant to VALUE IFRS Plc, and (iii) provides additional disclosure examples.

The appendices give further information about the operating and financial review (management commentary), alternative

formats for the statement of profit or loss and other comprehensive income and the statement of cash flows, and industry-

specific disclosures. A summary of all standards that apply for the first time to annual reports beginning on or after 1

January 2019 is included in Appendix D, and abbreviations used in this publication are listed in Appendix E.

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As VALUE IFRS Plc is an existing preparer of IFRS consolidated financial statements, IFRS 1 First-time Adoption of

International Financial Reporting Standards does not apply. Guidance on financial statements for first-time adopters of

IFRS 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 may

be acceptable if they comply with the specific disclosure requirements prescribed in IFRS. Readers may find our IFRS

disclosure checklist 2019 useful to identify other disclosures that may be relevant under the circumstances but are not

illustrated in this publication.

purpose of this publication is to provide a broad selection of illustrative disclosures which cover most common scenarios

encountered in practice. The underlying story of the company only provides the framework for these disclosures and the

amounts disclosed are for illustration purposes only. Disclosures should not be included where they are not relevant or not

material in specific circumstances. Guidance on assessing materiality is provided in IAS 1 Presentation of Financial

Statements 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 additional

disclosures that are not illustrated in this publication.

Format

There is a general view that financial reports have become too complex and difficult to read and that financial reporting

to find what they need continues to decline. This has implications for the reputation of companies who fail to keep pace. A

global study confirmed this trend, with the majority of analysts stating that the quality of reporting directly influenced their

opinion of the quality of management.

report 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 more

prominent 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 financial

statements 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,

is for completeness purposes. Entities should consider their own individual circumstances and only include policies that are

relevant to their financial statements.

The structure of financial reports should reflect the particular circumstances of the company and the likely priorities of its

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would be most relevant to them. The structure used in this publication is not meant to be used as a template, but to provide

you with possible ideas. It will not necessarily be suitable for all companies. Specialised companies and industry-specific requirements

VALUE IFRS Plc does not illustrate the disclosures specifically relevant to specialised industries. However, Appendix C

provides an illustration and explanation of the disclosure requirements of IFRS 6 Exploration for and Evaluation of

Mineral Resources and IAS 41 Agriculture. Further examples of industry-specific accounting policies and other relevant

disclosures 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± Insurance

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PwC Manual of Accounting ± IFRS

For further insights on the application of the IFRS refer to the PwC Manual of Accounting which can be

accessed through our Inform website (link will only work for registered users). Each chapter has a series of

frequently asked questions which provide useful guidance on particular aspects of each accounting standard.

PwC 6 IAS1(49),(51)(a) VALUE IFRS Plc

Annual financial report ± 31 December 2019 1-11

IAS1(49) Financial statements

Consolidated statement of profit or loss 9

Consolidated statement of comprehensive income 10

Consolidated balance sheet 17

Consolidated statement of changes in equity 21

Consolidated statement of cash flows 24

Notes to the financial statements 27

IAS1(51)(b),(d) These financial statements are consolidated financial statements for the group consisting of VALUE

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