In the preparation of financial statement an entity is required to disclosed comparative information in respect of previous periods
both in the face of the financial statements and in the respective notes. This is as stated in IAS 1 paragraph 38.
In presenting the financial statement, the minimum comparative disclosure is two statements of financial position, two of each of the other statements (statement of profit and loss and other comprehensive income; statement of changes in equity and statement of cash flow) and two related notes.
Furthermore, if the entity retrospectively applies an accounting policy, restates items, or reclassifies items, and those adjustments has a material effect on the information in the statement of financial position at the beginning of the comparative period. Then a third statement of financial position will be required.
The three statement of financial position to be presented are:
(1) the end of the current period,
(2) the end of the previous period (which is the same as the beginning of the current period), and
(3) the beginning of the earliest comparative period.
Paragraph 41 stated that when an entity reclassified an item, the entity shall disclose the following information:
(1) the nature of the reclassification;
(2) the amount of each item or class of items that is reclassified; and
(3) the reason for the reclassification.
If however it is impracticable to disclosed reclassification of an item in the financial statements, the entity shall state:
(a) the reason for not reclassifying the amounts, and
(b) the nature of the adjustments that would have been made if the amounts had been reclassified.
Advantages of Comparative Information
(1) It enables users to make informed economic decisions
(2) Comparative information provides narrative and descriptive information that help users understanding the financial statements of the current period and
(3) It allowed the assessment of trends in financial information for predictive purposes.