Affiliation:
1. Judge Institute of Management at the University of Cambridge.
2. International Accounting Standards Board.
Abstract
Income, expenses, gains, and losses with similar informational properties can, in principle, be aggregated and presented as subsets of comprehensive income without losing information. Of particular importance is the splitting of comprehensive income into earnings and all other items. Earnings is typically conceptualized as an aggregation that excludes items that are nonoperating, nonrecurring, or outside management's control. This paper analyzes the concept of earnings and finds that it cannot be defined satisfactorily for the purposes of an accounting standard. The paper proposes an alternative approach to the reporting of financial performance, which provides a useful disaggregation of comprehensive income without attempting to define earnings. This approach is based upon the separate presentation, in a matrix format, of remeasurements, which are amounts resulting from revisions to the carrying amounts of assets and liabilities. This approach is shown to parallel the concept of earnings in its predictive and feedback properties, yet it is also shown to have additional benefits. In particular, the proposed approach has a relatively objective, consistently applied measurement basis, it displays clearly the effects of the mixed attribute accounting model, and it facilitates analysis of the effects of measurement subjectivity on reported financial performance. The analysis in this paper has been discussed extensively by the IASB and is expected, in due course, to form part of an IASB public consultative document.
Publisher
American Accounting Association
Reference47 articles.
1. Revaluations of fixed assets and future firm performance: Evidence from the UK
2. Accounting Standards Board (ASB). 1992. FRS 3 Reporting Financial Performance. London, U.K.: ASB
3. Stock market valuation of gains and losses on commercial banks' investment securities An empirical analysis
4. American Institute of Certified Public Accountants (AICPA). 1995. Improving Business Reporting-A Customer Focus (Comprehensive Report of the Special Committee on Financial Reporting). New York, NY: AICPA.
5. Association for Investment Management and Research (AIMR). 1993. Financial Reporting in the 1990s and Beyond. Charlottesville, VA: AIMR.
Cited by
69 articles.
订阅此论文施引文献
订阅此论文施引文献,注册后可以免费订阅5篇论文的施引文献,订阅后可以查看论文全部施引文献