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Statement of Financial Accounting Standards No. 130 - page 19 / 57

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primary financial statement referred to as a "statement of nonowner

movements in equity."  The purpose of that statement would be to highlight

more prominently gains and losses, such as those arising from revaluations

and deferred exchange differences, that are not reported in the income

statement under existing IASC standards.\8/  The IASC's proposed

requirement is similar in concept to this Statement's requirement for

reporting comprehensive income and the ASB's requirement for a statement of

total recognized gains and losses.

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\8/  In redeliberations of the IASC Exposure Draft, the proposed requirement

    for a separate statement of nonowner movements in equity has been

    modified.  As of April 1997, the IASC tentatively decided to require

    that an enterprise present, as a separate component of its financial

    statements, a statement showing (a) the net profit or loss for the

    period, (b) each item of income and expenses and gains and losses

    which, as required by other standards, are recognized directly in

    equity, and the total of those items, (c) the total of both item (a)

    and item (b) above, and (d) the cumulative effect of changes in

    accounting policy and the correction of fundamental errors.

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45. In addition to users' concerns about reporting comprehensive income

items in equity and the desire for international harmonization, the project

on reporting comprehensive income became more urgent because of the

increasing use of separate components in equity for certain comprehensive

income items.  In that regard, a recent motivating factor for adding the

comprehensive income project to the Board's technical agenda was the

Board's financial instruments project, which is expected to result in

additional comprehensive income items.

Financial Instruments Project

46. Many financial instruments are "off-balance-sheet."  In the derivatives

and hedging portion of the financial instruments project, the Board has

proposed that all derivative instruments should be recognized and measured

at fair value.  Moreover, Board members believe that most, if not all,

financial instruments ultimately should be recognized and measured at fair

value because fair values generally are more decision useful (that is, more

relevant), more understandable, and more practical to use than cost or

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