G4+1 Study Title: Reporting Financial Performance
Published: September 1999

Conclusions:

Generally, the income statement is used to report an enterprise's financial performance for a period. However, some gains and losses today are reported directly in equity outside the income statement, for example, property revaluations, changes in fair values of certain financial instruments, and some foreign currency translation gains and losses. Additionally, some aspects of performance are reported in the notes, for instance, operating results by line of business and geographical area. Other aspects of performance are reported by subtotals in the income statement, for example continuing and discontinuing operations, or by segregating unusual items.

IASC and some national GAAPs have added a "second performance statement" to capture in one place those gains and losses that are not reported in the income statement. Several jurisdictions require a combined or comprehensive performance statement.

The G4+1 study addresses how to achieve greater consistency to reporting practice without destroying the usefulness of existing practice.

The main G4+1 proposals are:

• financial performance should be presented in one financial statement rather than two or more statements;
• the single statement of financial performance should be divided into three components:
  - the results of operating (or trading) activities;
  - the results of financing and other treasury activities; and
  - other gains and losses.
  
• recycling should not generally be permitted (recycling is reporting the same item of income, expense, gain, or loss in two different periods in two different types of performance measures, for example, first in "other gains and losses" and subsequently in the results of operating activities);
• the category of extraordinary items should be abolished, and abnormal or exceptional items should not be reported as a separate category of revenue or expenses;
• results of continuing and discontinued operations should be segregated; and
• changes in accounting policy should be reported by retrospectively applying the new policy with restatement of prior periods.

Related IASB Agenda Project: Reporting Financiaal Performance.