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Financial Statements Presentation Project

Financial Statements Presentation Project. Financial Statements Presentation. Objective – to establish presentation standards that would improve the ability of users to Understand an entity’s present and past financial position

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Financial Statements Presentation Project

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  1. Financial Statements Presentation Project

  2. Financial Statements Presentation • Objective – to establish presentation standards that would improve the ability of users to • Understand an entity’s present and past financial position • Understand the past operating, financing, and other activities that caused an entity’s financial position to change and the components of those changes • Use that financial statement information to assess the amounts, timing, and uncertainty of an entity’s future cash flows • Joint FASB/IASB project

  3. Financial Statements Presentation - Phase A • Phase A (IASB issued Phase A ED in 2006) • Whether to require single statement of comprehensive income • Which statements should be required • Number of years to present • Presentation of per-share information • FASB chose not to publish separate ED on Phase A

  4. Financial StatementsPresentation - Phase B • Phase B (FASB will address Phase A and B together) • Defining totals and subtotals to be reported • Whether OCI should be recycled to net income • Reconsideration of SFAS 95 (Cash Flows) • Standards for aggregating and disaggregating information • FASB will issue Preliminary Views document on Phase B (and Phase A) in 2008

  5. Financial StatementsPresentation - Phase C • Phase C • Which financial statements should be required in interim financial reports • Whether interim financial should be allowed to be in condensed format • What comparative periods should be required • Whether guidance for nonpublic entities should differ from publicly-held • Work on Phase C will commence during latter portion of Phase B

  6. Financial Statements PresentationSelected Decisions To-Date(Phase A Topics) • Complete set of statements includes • B/S beginning of year • B/S end of year • Single-statement version of comprehensive income with required subtotal for net income (IASB proposes to allow two statements) • Statement of changes in equity • Statement of cash flows • Minimum two years (three balance sheets) • Basic and diluted EPs on face (only for net income)

  7. Financial Statements PresentationSelected Decisions To-Date(on working principles related to Phase B topics) • Financial statements should present information in a manner that • Portrays a cohesive financial picture • Separates financing activities from business and other activities • Further separates financing activities into transactions with owners and all other financing activities • Helps a user assess the liquidity of an entity’s assets and liabilities

  8. Selected Decisions To-Date onWorking Principles Related to Phase B • Helps a user understand • Basis on which assets and liabilities are measured • Uncertainty in measurements of individual assets and liabilities • What causes a change in reported amounts of individual assets and liabilities • Helps users to assess • An entity’s ability to generate future cash inflows • An entity’s ability to meet its obligations and pay dividends, and its need for external financing • The difference between cash transactions and accrual accounting • The effects of noncash activities during the period on an entity’s financial position

  9. Selected Decisions To-Date on Working Principles Related to Phase B • Statement of financial position • Business • Operating assets & liabilities • Investing assets & liabilities • Financing • Financing assets • Financing liabilities • Income taxes • Discontinued operations • Equity

  10. Selected Decisions To-Date on Working Principles Related to Phase B • Earnings and comprehensive income • Business • Operating income • Investment income • Financing • Financing income • Financing expenses • Income taxes • Discontinued operations (net of tax) • Other comprehensive income (net of tax)

  11. Selected Decisions To-Date on Working Principles Related to Phase B • Statement of cash flows • Business • Operating cash flows • Investment cash flows • Financing • Financing asset cash flows • Financing liability cash flows • Income taxes • Discontinued operations • Equity

  12. Selected Decisions To-Date on Working Principles Related to Phase B • The operating category would include assets and liabilities that management views as integral to its main business activities and unrelated to financing those activities • The investing category would include assets and liabilities that are not related to financing the entity’s business activities that management views as not integral to its main business activities (e.g., available-for-sale financial instruments) • The financing section would include financial assets and financial liabilities that management views as part of the financing of the entity’s business activities

  13. Selected Decisions To-Date on Working Principles Related to Phase B • The two Boards are reconsidering what constitutes a discontinued operation and the specifics of how it should be presented • Extraordinary items would not be presented as a separate section

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