FASB, IASB Ready Comprehensive Income Requirements

The Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) reached some key agreements in Feburary to finalize a proposed new approach for explaining income information to investors.

The two boards reached some verbal agreements in their joint project on how companies would be required—or in some cases allowed—to present information in a “statement of comprehensive income,” a new financial statement that would replace the existing income statement.

The idea is to provide a more comprehensive view of an entity’s income, in part to scuttle the almighty reliance currently placed on the “net income” figure that becomes the bottom line on existing income statements. The new statement is aimed at giving a more balanced view of not only profit-and-loss figures but also other comprehensive income, which reflects gains and losses that have not yet been realized. That often includes things like gains or losses on securities or derivatives, pension costs, or foreign investments and currency hedges.