Reclassification of incomes and expenses from other comprehensive income to profit or loss – reasons, scope and consequences
Journal Title: Zarządzanie i Finanse - Year 2014, Vol 12, Issue 2
Abstract
The article covers three issues: 1) justification and layout for operating profit or loss disclosures in financial statements 2) criteria to present some income and expense items as components of other comprehensive income 3) usefulness of reclassification of some other comprehensive income items to profit or loss The basis for the presented analysis is a discussion document dealing with the new Conceptual Framework issued by the IASB in June 2013. In terms of operating profit presentation the Board appears to have a clear opinion. It should be presented as a separate component of financial statements – as an income statement or as a separate line in the statement of comprehensive income. There is however no unanimous view on classifying certain incomes and expenses as other comprehensive income. Two concepts have been presented: the narrow one, in which only the bridging items and mismatched remeasurements would be presented, and the wider one in which transitory remeasurements are added. In order to ensure usefulness and faithful representation in financial state- ments it appears reasonable to account for fair value remeasurements of assets and liabilities as part of other comprehensive income. The amounts would subse- quently be recycled back to profit or loss on derecognition (for example disposal of an asset). This would enable to present in income statement the profit figure which is available for distribution.
Authors and Affiliations
Jerzy Gierusz
Keywords
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