COMMENT BY L.VENKATESAN CHENNAI 600 020
Comment by L.Venkatesan
Chartered Accountant
New no 23 ol No 13 28th Cross Indira nagar Chennai 600 0-20
PRESENTATION OF ITEMS OF OTHER COMPREHENSIVE INCOME
refer to
paragraphs
Statement of profit or loss and other
comprehensive income
Question 1
The Board proposes to change the title of the statement of
comprehensive income to ‘Statement of profit or loss and other
comprehensive income’ when referred to in IFRSs and its other
publications. Do you agree? Why or why not? What alternative do
you propose?
REPLY; THE WORD OTHER COMPREHENVIE INCOME SHOULD BE
RENAMED AS CAPITAL PROFIT
OR AS UNREALISED FAIR
VALUATION INCOME
10, BC21
Question 2
The proposals would require entities to present a statement of
12, 81,
BC17-BC19
profit or loss and other comprehensive income with two sections—
profit or loss and items of other comprehensive income. The Board
believes this will provide more consistency in presentation and
make financial statements more comparable. Do you agree? Why or
why not? What alternative do you propose?
REPLY I AGREE WITH THIS ARGUMENT BUT INFORMATION IS
NEEDED ON REALISED AND UNREALISED GAINS DUE TO
CAHNGES IN FAIR VALUE
Presentation of items of other comprehensive income
Question 3
The exposure draft proposes to require entities to present items of
other comprehensive income (OCI) that will be reclassified to profit
or loss (recycled) in subsequent periods upon derecognition
separately from items of OCI that will not be reclassified to profit or
loss. Do you support this approach? Why or why not? What
alternative do you propose, and why?
REPLY THIS IS A GOOD MOVE BUT DETAILS OF REALISED AND
UNREALISED VALUE TO BE IN DICATED
82A, BC25
and BC26
Question 4
The exposure draft also proposes to require that income tax on
91,
BC27-BC29
items presented in OCI should be allocated between items that
might be subsequently reclassified to profit or loss and those that
will not be reclassified subsequently to profit or loss, if the items in
OCI are presented before tax. Do you support this proposal? Why
or why not? What alternative do you propose and why?
REPLY THIS IS A CORRECT APPRAOCH
Benefits and costs
Question 5
In the Board’s assessment:
(a)
BC32-BC36
the main benefits of the proposals are:
(i)
presenting all non-owner changes in equity in the same
statement.
REPLY ; THIS HAS NOT COME OUT IN THE PREPOSED CHANGES PLEASE RECHECK ONCE AGAIN
(ii)
improving comparability by eliminating options
currently in IAS 1.
REPLY : COMPRESHENSIVE INCOME IS NOT AN INCOME ATALL HENCE IT SHOULD BE DIRECTLY
CREDITED TO RESER AS IS BEING DONE IN INDIA NOW
(iii) maintaining a clear distinction between profit or loss
and items of other comprehensive income.
REPLY : WE SHOULD ALSO MAINTAIN DISTINCTION
BETWEEN REALISED AND UNREALISED GAIN
(iv) improving clarity of items presented in OCI by requiring
them to be classified into items that might be
reclassified subsequently to profit or loss and items that
will not be reclassified subsequently to profit or loss.
REPLY THIS IS A CORRECT MOVE
(b)
the costs of the proposals should be minimal because in
applying the existing version of IAS 1, entities must have all
the information required to apply the proposed amendments.
REPLY ; THIS IS A NECESSARY CAHNGE HENCE COST IS
NOT
A
CONSIDERATION
THIS
WILL
IMPROVE
PESENTATION
Do you agree with the Board’s assessment? Why or why not?
Other comments
Question 6
Do you have any other comments on the proposals?
REPLY : DIVIDEND DISTRIBUTION SHOULD BE TREATED AS AN ADJUSTUNG EVENT
IN ADDITION TO EPS , ROI ALSO SHOULD BE PUBLISHED AS MANY OF THE COMPANIES DO NOT DISRTIBUTE
DIVIDEND BUT PLOUGH BACK INCOME . IN SUCH A SITUATION EPS IS NOT THE RIGHT WAY OF MEASURING
THE PERFORMANCE
EPS SHOULD BE PRESENT ED SEPARATELY FOR REALISED AND UNREALISED INCOME
THE STATEMENT , STATEMENT OF FINACIAL POSITION SHOULD ALSO BE CHANGED TO BALANCE SHEET
FILES MEANT FOR COMMENT SHOULD ALWAYS BE A WORD FILE
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PRESENTATION OF ITEMS OF OTHER COMPREHENSIVE INCOME
[Draft] Amendments to
IAS 1 Presentation of Financial Statements
Paragraph 7 is amended (new text is underlined).
Notes contain information in addition to that presented in the
statement of financial position, statement of profit or loss and other
comprehensive income, …
Paragraph 12 is deleted. Paragraph 10, the headings above paragraphs 81
and 82 and paragraphs 81, 82 and 83 are amended (new text is
underlined and deleted text is struck through). Paragraphs 82A and
82B are added and paragraph 84 is deleted.
Complete set of financial statements
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A complete set of financial statements comprises:
(b)
a statement of profit or loss and other comprehensive income for
the period;
An entity may use titles for the statements other than those used in this
Standard. For example, an entity may use the title ‘statement of
comprehensive income’ instead of ‘statement of profit or loss and other
comprehensive income’.
COMMENT USING INCOME FOR BOTH THE STATEMENT IS NOT
CORRECT . COMPREHENSIVE INCOME SHOULD BE CALLED CAPITAL
RECIPT OR CAPITAL INCOME TO DISTINGUISH FROM REVENUE INCOME
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[Deleted] As permitted by paragraph 81, an entity may present the
components of profit or loss either as part of a single statement of
comprehensive income or in a separate income statement. When an
income statement is presented it is part of a complete set of financial
statements and shall be displayed immediately before the statement of
comprehensive income.
COMMENT A SINGLE STATEMENT OF TWO ITEMS ONE REVENUE
AND OTHER CAPITAL IN NATURE IS NOT CORRECT . THERE SHOULD
BE TWO STATEMENT TO DISTINGUSH THE SAME
Statement of profit or loss and other comprehensive
income
81
An entity shall present all items of income and expense recognised in a
period:
(a)
in a single statement of comprehensive income, or
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(b)
81
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in two statements: a statement displaying components of profit or
loss (separate income statement) and a second statement beginning
with profit or loss and displaying components of other
comprehensive income (statement of comprehensive income).
A statement of profit or loss and other comprehensive income shall be
presented in two sections:
(a)
profit or loss; and
(b)
other comprehensive income.
COMMENT : IT SHOULD ALWAYS BE PRESENTED IN TWO SECTIONS
Information to be presented in the statement of profit or loss
and other comprehensive income
82
As a minimum, the profit or loss section of the statement of profit or loss
and other comprehensive income shall include line items that present the
following amounts for the period:
(a)
revenue;
(aa) gains and losses arising from the derecognition of financial assets
measured at amortised cost;
(b)
finance costs;
(c)
share of the profit or loss of associates and joint ventures
accounted for using the equity method;
(ca) if a financial asset is reclassified so that it is measured at fair value,
any gain or loss arising from a difference between the previous
carrying amount and its fair value at the reclassification date
(as defined in IFRS 9);
(d)
tax expense;
(e)
a single amount comprising the total of:
(i)
the post-tax profit or loss of discontinued operations and
(ii)
the post-tax gain or loss recognised on the measurement to
fair value less costs to sell or on the disposal of the assets or
disposal group(s) constituting the discontinued operation;
(e)
a single amount for the total of discontinued operations
(see IFRS 5); and
(f)
profit or loss.;
(g)-(i) [deleted]
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(g)
each component of other comprehensive income classified by
nature (excluding amounts in (h));
(h)
share of the other comprehensive income of associates and joint
ventures accounted for using the equity method; and
(i)
total comprehensive income.
COMENT ; THE TOTAL OF PROFIT AND LOSS ACCOUNT SHOULD BE DIVIDED INTO REALISED PROFIT
AND UNREALISED PROFIT LIKE CHANGES IN FAIR VALUE WHICH IS NOT A REAL PROFIT THERE
SHOULD BE A BAR ON DISTRIBUTION OF UNREALISED PROFIT INCLUDING ISSUE OF BONUS SHARES
82A
As a minimum, the other comprehensive income section shall include
line items that present the following amounts for the period:
(a)
items of other comprehensive income grouped into those that, in
accordance with other IFRSs:
(i)
will be reclassified subsequently to profit or loss when
specific conditions are met, and
(ii)
will not be reclassified subsequently to profit or loss.
(b)
share of the other comprehensive income of associates and joint
ventures accounted for using the equity method; and
(c)
total other comprehensive income.
COMMENT; THE TOTAL SHOULD ALOS BE BIFERCATED INTO REALISED AND UNREALISED PROFIT.
THERE SHOULD BE A BAR IN DISTRIBUTING UNREALISED PROFIT TO SHAREHOLDERS INCLUDING
DISTRIBUTION OF BONUS SHARES
82B
The statement shall also display the total of profit or loss and other
comprehensive income.
COMMENT THERE SHOULD BE SEPARATE TOTAL FOR REALISED AND UNREALISED PROFIT
83
An entity shall disclose the following items in the statement of profit or
loss and other comprehensive income as allocations for the period:
(a)
(b)
84
profit or loss for the period attributable to:
(i)
non-controlling interests, and
(ii)
owners of the parent.
comprehensive income for the period attributable to:
(i)
non-controlling interests, and
(ii)
owners of the parent.
[Deleted] An entity may present in a separate income statement (see
paragraph 81) the line items in paragraph 82(a)-(f) and the disclosures in
paragraph 83(a).
In paragraphs 85-87, 100 and 115 the references to ‘the separate
income statement (if presented)’ are deleted and
‘statement of
comprehensive income’ is replaced with ‘statement of profit or loss and
other comprehensive income’.
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EXPOSURE DRAFT MAY 2010
In paragraphs 90 and 94 ‘statement of comprehensive income’ is
replaced with ‘statement of profit or loss and other comprehensive
income’. Paragraph 91 is amended (new text is underlined and deleted
text is struck through). Paragraph 139G is added.
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An entity may present items components of other comprehensive income
either:
(a)
net of related tax effects, or
(b)
before related tax effects with one amount shown for the aggregate
amount of income tax relating to those components.
If an entity elects alternative (b) above, then it must allocate the tax
between the items that might be reclassified subsequently to the profit or
loss section and those that will not be reclassified subsequently to the
profit or loss section.
139G Presentation of Items of Other Comprehensive Income (amendments to IAS 1),
issued in [date], amended the terminology used throughout IFRSs.
In addition it amended paragraphs 10, 82, 83 and 91, added paragraphs
81A, 82A and 82B, and deleted paragraphs 12, 81 and 84. An entity shall
apply those [draft] amendments for annual periods beginning on or after
[date to be inserted after exposure]. Earlier application is permitted.
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