Financial Statement Presentation – Statement of Comprehensive Income

Date recorded:

The Boards considered and confirmed their decisions regarding the exposure draft that would propose to eliminate the option to present a separate income statement and statement of comprehensive income.

The IASB Chairman noted that the current proposal would be extremely controversial and urged the Boards to consider a wording that would reflect the nature of the proposal (continuous statement) and avoid the rumours regarding what the Boards decided not to do (eliminate the notion of net income).

The Boards decided that an entity must display total comprehensive income and its components in a continuous statement of comprehensive income, containing two sections: profit or loss and other comprehensive income.

Some Board members were concerned that this discussion is difficult to explain and the Boards have more important issue to be solved than to engage in the fight over this issue (given it was a source of major controversy last time it was proposed by the IASB).

Other Board members were concerned with the confusion created as by the EPS measure that would be based on net income and not based on the bottom line. They argued that 'Earnings' were not used anywhere else in the Statement of Comprehensive Income and thus EPS measure might mislead the users. The Boards disagreed and confirmed the decision as proposed. They argued that any changes to EPS would be extremely controversial.

Finally the Boards confirmed all the related decisions made at a previous meeting. The Boards also agreed that the amendment shall not influence which items should be reclassified between net profit or loss and the other comprehensive income and how those reclassifications were presented under IFRSs and the US GAAP.

One IASB member expressed his concerns that this narrow project was planned to be published at the end of March, whereas the comprehensive Financial Statement Presentation (FSP) proposals would be published later in April and suggested combining them. Other IASB members responded that this is a narrow project that should be finalised irrespective of the decisions made in the comprehensive Financial Statement Presentation project. Moreover this narrow amendment is connected with the decisions made in the scope of the financial instruments and post-employment befits projects. The Boards agreed that the Basis for Conclusion would explicitly state that rationale.

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