IASB June 2008
The Board confirmed the suggestion made at its joint meeting with the FASB in April 2008 that the financial statement presentation project should not seek to change existing standards relating to what items are recognised outside of profit or loss. This would result in the retention of existing requirements on the presentation of other comprehensive income (OCI) items in a statement of comprehensive income and on the recycling mechanism. Accordingly, the Board decided that the discussion paper would express its preliminary view that:
- an entity should present a single statement of comprehensive income with OCI items presented in a separate section (as described in paragraph 81 of IAS 1 Presentation of Financial Statements. An entity should indicate within that section (parenthetically or otherwise) the category (operating, investing or financing) to which each OCI item relates.
- income taxes would be allocated among continuing operations, discontinued operations, items of other comprehensive income, and items charged or credited directly to equity. The forthcoming exposure draft on the revision of IAS 12 Income Taxes will include guidance on intraperiod tax allocation.
- an entity should present income tax assets, liabilities and cash flows in a separate section in the statements of financial position and cash flows. The exposure draft on IAS 12 should include the income tax disclosures the Board addressed in March 2008 (related to the reconciliation explaining the relationship between income tax expense and accounting profit).
The Board decided that the project should not:
- make any further changes to the statement of changes in equity
- address disclosures related to capital management and to measurement uncertainty
- address earnings per share (or any other per share measures), and thus will not amend IAS 33 Earnings per Share.
The Board also decided that the discussion paper should not:
- address offsetting or disclosures about the measurement bases of assets and liabilities. The exposure draft stage of the project will address those issues.
- address possible additional segment disclosures; however, the paper should seek views on whether the Board should address segment disclosures beyond consequential amendments.
The Board made the following decisions; the first three of those decisions modify its previously expressed views:
- The schedule reconciling the statement of cash flows to the statement of comprehensive income should not include equity transactions (therefore it would not include the equity section of the statement of cash flows); moreover, changes in assets and liabilities not attributable to remeasurements should be included in a single column and not further disaggregated.
- An entity should determine how much information is presented in the discontinued operations section by applying the disaggregation objective (ie information should be disaggregated if the additional information will be useful to users of financial statements when they assess future cash flows).
- The discussion paper should not express a preference for allocating the effects of basket transactions to categories; instead it should describe allocation and non-allocation alternatives and ask for respondents’ views.
- An entity should display gains and losses on transactions in foreign currency, including the components of any net gain or loss on remeasuring the financial statements of an entity into its functional currency, in the same section and category as the assets or liabilities that gave rise to those gains or losses.
The Board also discussed issues raised in the drafting process and, among other things, clarified its views on the definition of the operating and investing categories and on the disaggregation of information by function and nature in the statement of comprehensive income.
The staff expect the discussion paper to be available on the IASB’s Website in September 2008 for a six-month comment period. During that time, various companies will field test the Board’s preliminary views on financial statement presentation.