Financial Statement Presentation
Definition of remeasurements
The Board discussed a staff recommendation to state that an objective of presenting remeasurement information is to enable users of financial statements to identify components of comprehensive income that are not persistent (that is, not indicative of future amounts of income) and those that are.
The staff recommendation also included explanatory guidance giving examples of items which would be considered to be remeasurements.
Various Board members expressed doubts about whether the principle of 'persistence' was generally well understood and whether the definition and explanatory guidance were sufficiently clear.
A Board member questioned whether the definition should be broader, including items such as inventory impairments and changes in tax rates.
The Board tentatively decided (by a narrow majority) to include the proposed objective in the exposure draft.
By a wider majority, the Board also tentatively decided to retain the following definition of a remeasurement:
'A remeasurement is an amount recognised in comprehensive income that reflects the effects of a change in the carrying amount of an asset or liability to a current price or value (or to an estimate of a current price or value). A current price or value includes the following measurement attributes: fair value, fair value less costs to sell, value in use, and net realisable value.'
and to include the proposed explanatory paragraphs giving examples of remeasurements.
An additional staff recommendation was made to provide guidance on the extent to which an item would need to apply observable market data to qualify as a remeasurement. It was suggested that such guidance could be confusing, and no vote was taken on the proposal.
Presentation of remeasurements
The staff presented three alternatives for the presentation of remeasurements:
- Alternative 1: Remeasurement information presented only as part of the analysis of changes in statement of financial position line items.
- Alternative 2: Disaggregation of the statement of comprehensive income into a two-column format ('income and expense except for remeasurement' and 'remeasurements') with an optional third 'total' column.
- Alternative 3: Present remeasurements in a single note to the financial statements.
The staff recommendation was for Alternative 2.
A number of Board members said that Alternative 2 was hard to read and would still need analysis in the notes to the financial statements. Another Board member voiced concerns about the optionality introduced by the choice of inclusion or non-inclusion of a 'total' column under Alternative 2.
In respect of Alternative 3, concerns were raised about the potential for duplication of information already presented elsewhere in the financial statements (in particular, items of Other Comprehensive Income).
The proposal to adopt Alternative 2 received little support, with a large majority of Board members voting to approve tentatively Alternative 3.