income and its components in a statement of changes in equity, the Board
thought that a net-of-tax display of the components of other comprehensive
income would be more practical in that statement because other items in
that statement are displayed net of related tax effects.
104. The Board concluded that regardless of whether a before-tax or net-of-
tax display was used, adequate disclosure of the amount of income tax
expense or benefit separately allocated to individual components of other
comprehensive income should be provided. Furthermore, the Board concluded
that the tax disclosure provisions should be an integral part of the
comprehensive income standard.
105. The Board decided that an enterprise should be permitted a choice of
whether to display components of other comprehensive income on a before-tax
basis or on a net-of-tax basis. Both display formats provide adequate
information as long as disclosures of the related tax effects are provided.
Conclusions on Other Issues
Including Prior-Period Adjustments in Comprehensive Income
106. The Board considered whether items accounted for as prior-period
adjustments should be included in comprehensive income of the current
period. Opinion 9, as amended by FASB Statement No. 16, Prior Period
Adjustments, requires that prior-period adjustments be reflected as
retroactive restatements of the amounts of net income (and the components
thereof) and retained earnings balances (as well as other affected
balances) for all financial statements presented for comparative purposes.
In single-period financial statements, prior-period adjustments are
reflected as adjustments of the opening balance of retained earnings. The
Board decided that because of the requirement for retroactive restatement
of earlier period financial statements, items accounted for as prior-period
adjustments are effectively included in comprehensive income of earlier
periods and, therefore, should not be displayed in comprehensive income of
the current period.
Statement of Cash Flows Reporting
107. The Board considered whether the operating section of an indirect-
method statement of cash flows or the reconciliation provided with the
operating section of a direct-method statement of cash flows should begin