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ASBJ begins publishing discussion paper series

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26 May 2014

The Accounting Standards Board of Japan (ASBJ) has published the first issue of a new series of short discussion papers intended to contribute to the global discussion around financial reporting standards. Issue No.1 is entitled 'Is OCI Unnecessary?'.

The paper explores the possibility of abolishing or minimising the use of other comprehensive income (OCI) in the financial statements. It does so by considering the usefulness of financial information if the same measurement basis must be used for measuring an asset or a liability both from the perspective of the entity's financial performance and its financial position (abolishing the use of OCI would mean that it would be impossible to use two measurement bases to measure the same asset or liability).

The paper comes to the conclusion that always using the same measurement basis would be unrealistic as users have increasingly called for more information to measured at current value on the face of the balance sheet. Moreover, the ASBJ points out that the Conceptual Framework itself indicates that the purposes of balance sheets and income statements are not necessarily congruent with each other, and that the use of two different measurement bases could increase the usefulness of the financial information presented. Overall, the paper concludes setting the goal of abolishing or minimising the use of OCI "would be inappropriate or unfeasible", and that on the contrary the continued use of OCI is necessary to maintain the usefulness of financial information.

Please click for access to the paper on the ASBJ's website.

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