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Financial Statement Presentation

IASB meeting summaries and observer notes


 IASB January 2010


 

 

The boards continued their deliberations on the proposals in the discussion paper Preliminary Views on Financial Statement Presentation. Specifically, the boards considered disaggregation by function and nature and segment disclosures (agenda paper 7A).

Background

The discussion paper proposed that within each category on the statement of comprehensive income, an entity should disaggregate its items of income and expense by function. Each of these functions should be further disaggregated by nature to the extent that such by-nature information enhances the usefulness of the statement of comprehensive income in predicting an entity's future cash flows. If that by-nature presentation is impractical on the face of the statement of comprehensive income, an entity should present the information in the notes to financial statements.

The discussion paper also proposed that if, in the opinion of management, presenting disaggregated information by function does not provide relevant information, an entity can disaggregate its items of comprehensive income by their nature within each category on the statement of comprehensive income.

In October 2009, the boards tentatively decided to retain the discussion paper proposal that an entity should disaggregate income and expense items by nature and by function. Furthermore, an entity with more than one reportable segment should present that disaggregated information in its segment note, while an entity with only one reportable segment should present that disaggregated information on its statement of comprehensive income.

Tentative decisions

At their January joint meeting, the boards tentatively decided that the exposure draft:

  • will specify that an entity with only one reportable segment may present its disaggregated by-nature information in a single note disclosure, rather than presenting that information on the statement of comprehensive income. An entity that presents its by-nature information in a note disclosure must also include its by-function information in the same note.
  • will specify that an entity with more than one reportable segment must present its disaggregated by-nature information in its segment note, and must also include its by-function information in the same note.
  • will specify that an entity that disaggregates income and expense items by both function and nature in the notes to financial statements should present its by-function information on the statement of comprehensive income.
  • will retain the discussion paper proposal that an entity should disaggregate its income and expense items in a manner that presents useful information for assessing the amount, timing and certainty of future cash flows. Consequently, if disaggregation by function does not enhance the usefulness for that purpose of the information on the statement of comprehensive income, an entity should instead disaggregate its income and expense items by nature only.

The boards also considered amendments to Accounting Standards Codification Topic 280 Segment Reporting and IFRS 8 Operating Segments. The boards tentatively decided that the exposure draft:

  • will require an entity that presents by-nature income and expense information in its segment note to classify items consistently between the statement of comprehensive income and the segment note.
  • will require an entity to present information about its operating segment activities that do not meet the criteria to be presented as a reportable segment separately from information about its corporate activities;
  • will require an entity to reconcile the operating profit (loss) of its reportable segments to its consolidated operating profit presented on the statement of comprehensive income.

Date: 1/19/2010