The Exposure Draft results from the first stage (known as 'Segment A') of the IASB's project on performance reporting and, if adopted, would bring IAS 1 largely into line with the equivalent US standard.
The second stage of the project is being undertaken jointly with the US Financial Accounting Standards Board (FASB), and includes a reconsideration of the presentation and display of information in the financial statements.
Under the proposals an entity would present all income and expenses separately from changes in its equity that arise from transactions with its owners. Entities would have a choice of presenting income and expenses in a single statement or in two statements. An entity would also be required to include in its set of financial statements a statement showing its financial position (or balance sheet) at the beginning of the previous period.
Comment deadline is 17 July 2006. Click for Press Release (PDF 68k).
The Exposure Draft:
- specifies that entities should present all income and expenses in one or two statements, separately from changes in equity arising from transactions with owners in their capacity as owners (ie owner changes in equity). Consequently, all owner changes in equity are presented separately from non-owner changes in equity. Accordingly, entities are not permitted to present income and expenses (ie non-owner changes in equity), as defined in the Framework, in the statement of changes in equity. The purpose of this amendment is to provide better information to users by requiring aggregation of items with shared characteristics.
- specifies that a statement of financial position as at the beginning of the period is included in financial statements. Accordingly, in addition to notes, entities presenting comparative information for the previous period are required to include, as a minimum, three statements of financial position and two of each of the other financial statements. IAS 1 requires the presentation of a minimum of two of each financial statement. The extra statement shows the financial position at the beginning of the previous period.
- replaces the term 'balance sheet' with 'statement of financial position' to reflect the function of that statement more closely.