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Statement of Financial Accounting Standards No. 130 - page 13 / 57

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to encourage users of financial statements to focus on the components that

constitute comprehensive income rather than limiting their analyses solely

to the amounts reported as net income and earnings per share. The current,

apparent market fixation on earnings per share is evidence that some users

exclude other measures of performance from their analyses. Messrs. Cope and

Foster believe that permitting items of other comprehensive income to be

reported solely in a statement of changes in equity does not achieve the

foregoing objective and may, in fact, divert the attention of some users of

financial statements from those items of comprehensive income, thereby

diminishing their understanding of the economic and financial performance

of the reporting enterprise.  For users of financial statements to fully

understand and appropriately analyze the economic and financial performance

of an enterprise, all items of other comprehensive income must be reported

in a statement of financial performance, as was proposed in the Exposure

Draft of this Statement.

   Messrs. Cope and Foster believe that the Board inappropriately failed

to respond to the clear and unequivocal call from users of financial

statements for the transparent presentation of all items of comprehensive

income, whose request is acknowledged in paragraphs 40 and 41 of this

Statement.  While many respondents to the Exposure Draft asserted that

users would be confused by the presentation of comprehensive income, the

users that testified at the public hearing on this project categorically

denied that that would be the case.

   Messrs. Cope and Foster also note that, as evidenced by the basis for

conclusions in the Exposure Draft, the Board held views similar to theirs

when it issued that document.  The stated objective in the Exposure Draft

was "to issue a Statement that requires that an enterprise report all

components of comprehensive income in one or two statements of financial

performance for the period in which those items are recognized."  Messrs.

Cope and Foster  believe that the basis for conclusions supporting this

Statement provides little, if any, rationale as to why, having determined

at the time it issued the Exposure Draft that comprehensive income is

clearly a measure of financial performance, the Board subsequently

concluded it should not require presentation of comprehensive income in a

statement of financial performance (paragraphs 58-67).  In fact, paragraph

67 of this Statement acknowledges the conceptual superiority of displaying

comprehensive income in a statement of performance.

   Finally, based on the Board's tentative conclusions, at this time it

seems that a future standard on accounting for hedging and derivative

instruments likely will provide that certain gains and losses on

transactions in derivative instruments not be included in the determination

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