The statement of financial position (SFP) presents the assets, liabilities, and equity of an entity at a specific point in time, showing its financial position and resources.
Assets
Non-current Assets
Assets expected to provide economic benefits for more than 1 accounting period, not intended for sale or consumption within the normal operating cycle.
- Property, plant and equipment: land, buildings, machinery and equipment, furniture and fixtures, motor vehicles.
- Accumulated depreciation
Total depreciation charged on an asset since acquisition, reducing its carrying value. - Intangible assets: patents, copyrights, trademarks.
- Goodwill
Excess paid when acquiring a business over the fair value of its net assets. - Long-term investments.
- Deferred tax assets
Future tax benefits arising from temporary accounting differences.
Current Assets
Assets expected to be realized, sold, or consumed within 1 year or within the entity’s normal operating cycle, whichever is longer.
- Cash and cash equivalents, inventory, short-term investments, accrued income.
- Accounts receivable.
- Allowance for doubtful debts
Estimate of receivables that may not be collected. - Prepaid expenses
Payments made in advance for future services or benefits, e.g. prepaid rent or insurance.
Liabilities
Non-current Liabilities
Obligations not due for settlement within 1 year or within the entity’s normal operating cycle.
- Long-term loans, debentures / bonds payable, mortgage payable.
- Lease liabilities
Future lease payments recognized under accounting standards such as IFRS 16. - Deferred tax liabilities
Future tax obligations arising from temporary differences between accounting and tax treatments. - Provision for employee benefits
Estimated future obligations such as gratuity or pension.
Current Liabilities
Obligations expected to be settled within 1 year or within the entity’s normal operating cycle.
- Accounts payable, short-term loans, bank overdraft, income tax payable, dividends payable.
- Accrued expenses
Incurred but unpaid, e.g. salaries or interest payable. - Current portion of long-term debt
The amount of long-term borrowings due within the next year. - Unearned revenue
Cash received before goods or services are delivered.
Equity
- Share capital: ordinary share capital, preference share capital.
- Share premium
Amount received above the face value of shares issued. - Retained earnings
Cumulative profits retained rather than distributed as dividends. - Reserves
Profits set aside for a specific purpose, e.g. expansion or contingencies. - Revaluation surplus
Increase in asset value recognized through revaluation. - Treasury shares
Shares repurchased by the company from its own shareholders.