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Statement of Financial Accounting Standards No. 130 - page 27 / 57





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end of the period and all aspects of its financial activities for the

period, thereby enhancing the understandability of the statements.  Also,

that total will provide enhanced comparability between enterprises by

providing a benchmark for users.

Describing the total for comprehensive income

69. The term comprehensive income is used consistently in this Statement to

describe the total of all components of comprehensive income, including net

income.  However, the Board decided not to require that an enterprise use

that term in financial statements because it traditionally has not

specified how particular amounts should be labeled and often has simply

required that a "descriptive label" be used.  In practice, a variety of

terms, such as net income, net earnings, or earnings, are used to describe

the total appearing at the bottom of a statement that reports the results

of operations.

70. Many respondents to the Exposure Draft indicated that the term

comprehensive income should not be used.  They said  that the term is

misleading because the amount is neither "comprehensive" nor "income."

Although the Exposure Draft did not require use of the term comprehensive

income, its consistent usage throughout the document (and in its title)

gave respondents the impression that it was required.

71. The Board discussed whether using the term comprehensive income would

be misleading.  The Board agreed that comprehensive income is "income"

because changes in equity (changes in assets and liabilities) are

identified by the Concepts Statements as revenues, expenses, gains, and

losses. The Board acknowledged that comprehensive income will never be

completely "comprehensive" because there always will be some assets and

liabilities that cannot be measured with sufficient reliability.

Therefore, those assets and liabilities as well as the changes in them will

not be recognized in the financial statements.  For example, the internally

generated intangible asset often referred to as intellectual capital is not

presently measured and recognized in financial statements.  The Board

agreed that comprehensive income is "comprehensive" to the extent that it

includes all recognized changes in equity during a period from transactions

and other events and circumstances from nonowner sources.  The Board

acknowledged that there are certain changes in equity that have

characteristics of comprehensive income but that are not presently included

in it.  (Refer to paragraphs 108-119.)  Those items may be addressed in a

broader-scope project on comprehensive income.

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