Accounting Business Reporting for Decision Making

CHAPTER 6 Statement of profit or loss and statement of changes in equity 237

Note

Consolidated

2015 ($’000) Description and disclosure requirements

Sales and

marketing

expenses

Occupancy

expenses

Administration

expenses

Other expenses

(374 084)

(160 216)

(27 711)

(35 414)

Total expenses excluding financing costs must be reported in the

statement of profit or loss.

Disaggregated expense components may be shown either in

the statement of profit or loss or in the notes to the accounts.

Expenses must be classified into their components according to

their nature (e.g. employee benefits, depreciation and amortisation,

lease expenses) or function (e.g. distribution, marketing, occupancy

and administrative). JB Hi-Fi Ltd has elected the latter classification.

Specific expenses must be disclosed (e.g. depreciation) and

JB Hi-Fi Ltd has disclosed these in note 5.

Finance costs 4 (5 927) Finance costs must be disclosed separately in the statement of

profit or loss. Finance costs include interest costs, lease finance

charges, amortisation of discounts or premiums relating to

borrowings, and amortisation or ancillary costs incurred in arranging

financing. Finance income includes interest received.

Profit before tax 195 532 This is income less expenses (excluding income tax expense).

Income tax expense 5 (59 021) This is the income tax expense relating to the entity’s continuing

operations.

Profit for the year 136 511 This is income less expenses (including income tax expense).

Attributable to:

Owners of the

company

136 511 This line item is often referred to as the ‘bottom line’ profit. It

represents the reporting period’s profit that is available to distribute

to the entity’s shareholders. If the entity has controlled entities

that are not 100 per cent owned, then it is necessary to recognise

that not all of the consolidated profit (loss) belongs to the entity’s

owners. A line item referred to as non-controlling interests reflects

the interest in the financial performance of the entity by outside

equity interests. JB Hi-Fi Ltd has no non-controlling interests as it

fully owns its subsidiaries.

Earnings per share

Basic

(cents per share)

Diluted

(cents per share)

137.91

136.46

These items express the profit or loss relative to the number of

shares that have been on issue during the reporting period. It is the

growth in earnings per share from one reporting period to another

that users are most interested in.

FIGURE 6.5 JB Hi-Fi Ltd statement of profit or loss for 2015 and disclosure requirements

Source: Adapted from JB Hi-Fi Ltd 2015, preliminary final report, p. 56.

Format for entities not required to comply with

accounting standards

Entities not required to prepare general purpose financial statements complying with accounting stan-

dards have freedom in the presentation of the statement of profit or loss. While the presentation and

classification of items can exhibit great diversity, the purpose of the statement of profit or loss does not

change: to report the profit or loss for the entity for the reporting period. As was shown in illustrative

example 6.1, the statement of profit or loss for an entity not required to comply with accounting stan-

dards is usually more detailed and less aggregated than that prepared in accordance with accounting

standards, as the statement is typically prepared for internal rather than external users. For example,

consider illustrative example 6.6.