Share premium is included in the income statement. Catalog: the cumulative financial result of the period. "Aggregate financial result of the period"
"Total financial results period "
EXAMPLE 6.20
Indicators of the Statement of Financial Results for 2014:
thousand roubles.
Decision
The aggregate financial result for 2014 is RUB 9843 thousand. (9723 thousand rubles + 120 thousand rubles).
The aggregate financial result for 2013 is 14,860 thousand rubles. (14 780 thousand rubles + 80 thousand rubles).
A fragment of the statement of financial results in example 6.20 will look like this.
3.2.22. Line 2900 "Basic earnings (loss) per share"
This line contains information on basic profit (loss) per share, which reflects part of the profit (loss) of the reporting period attributable to shareholders - owners common shares... This line is filled in only by joint stock companies (clause 27 of PBU 4/99, clause 2, clause "a" clause 16 Methodical recommendations on disclosure of information on earnings per share, approved by the Order Ministry of Finance of Russia from 21.03.2000 N 29n).
How to determine basic earnings (loss) per share
To determine the basic earnings (loss) per share, you first need to determine:
Basic profit (loss) of the reporting period;
The weighted average number of ordinary shares outstanding during the reporting period.
Calculation of basic profit (loss)
The basic profit (loss) of the reporting period is determined by reducing (increasing) the profit (loss) of the reporting period remaining at the disposal of the organization after taxation and other obligatory payments to the budget and off-budget funds, by the amount of dividends on preferred shares accrued to their owners for reporting period (Clause 4 of the Methodological Recommendations for Disclosure of Information on Earnings Per Share).
The amount of profit (loss) of the reporting period remaining at the disposal of the organization is reflected in line 2400 "Net profit (loss)" of the Statement of financial results.
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Kuban State Agrarian University, Krasnodar, Russia
The procedure for calculating the indicator of the aggregate financial result in accounting statements organization
Bashkatov Vadim Viktorovich
Malykh Evgeniya Evgenievna
annotation
The article presents the changes that have occurred in the composition and content of the financial statements, and considers in more detail the procedure for calculating the indicator ""
Keywords: statement of financial results, cumulative financial result of the period
The order of calculation of the total financial result of the accounting reporting of the organization
BashkatovVadimViktorovich
Cand.Econ.Sci., Senior teacher
Malykh Eugenia Evgenyevna
student of the Accounting and financial department
Kuban State Agrarian University, Krasnodar, Russia
The changes which have happened in the structure and the contents of accounting reports are presented in the article, and the procedure of payments indicator "Cumulative financial result of the period" is considered in detail
Keywords: report of financial results, total financial result of period
The statement of financial results is one of the main forms of financial statements, which characterizes the financial results for various types of activities of the organization for the reporting period and contains data on income, expenses and financial results in the cumulative amount from the beginning of the year to the reporting date. In addition, the reporting form under consideration is a link between the past and the current reporting period and shows due to what there have been changes in the balance sheet of the reporting period compared to the past. financial result accounting statements
The statement of financial results, in contrast to the balance sheet, is a fairly compact form. And if, when forming the analytical balance sheet, the consolidation or aggregation of articles mainly occurs, then when forming the analytical Report on financial results, on the contrary, the goal is to increase the number of indicators of the financial result. The importance of this process is due to the fact that the profit earned over the period is an increase in the capital of the organization.
Due to all of the above, we can conclude that the topic we are studying is relevant. In connection with the changes that have occurred in the composition and content of the financial statements, let us consider in more detail the procedure for calculating the indicator "cumulative financial result of the period".
The purpose of our research is to substantiate the need, as well as the procedure for calculating the indicator of the aggregate financial result in the statement of financial results.
The composition of the indicators of the main part of the statement of financial results, starting from the indicator “Revenue” to the indicator “Net profit (loss)”, has not essentially changed. The names of individual indicators and their codes became others. The sequence in which individual indicators are presented has changed. In addition, the required word “assets” has been added to the title of the item “Permanent tax liabilities”, and the renamed item is presented as an integral part of the indicator “Current income tax”.
The word “change” was reasonably added to the wording of deferred tax indicators. In this regard, these items of the statement of financial results are referred to as "Change in deferred tax liabilities”And“ Change in Deferred Tax Assets ”.
As for the "For reference" section of the statement of financial results, in addition to the basic and diluted profit (loss) indicators, the following indicators are included:
Revaluation result non-current assetsnot included in the net profit (loss) of the reporting period;
Aggregate financial result of the period.
These changes have brought russian reporting to IFRS standards.
The information provided in the report for reference will be useful to shareholders, investors of the organization and other interested internal and external users.
The main part of the aggregate financial result is the “net profit (loss)” indicator (line 2400). Net profit represents the credit balance on account 99 "Profit and loss" at the reporting date, and net loss - the debit balance on account 99 "Profit and loss" for the reporting period.
The final financial result of the organization is influenced by:
The financial result from the sale of products (works, services);
The financial result from the sale of fixed assets, intangible assets, materials and other property;
Other income and expenses.
When drawing up the annual financial statements, account 99 "Profits and losses" is closed. The closing entries as of December 31 of the reporting year the amount of net profit (loss) of the reporting year is written off from account 99 "Profit and loss" in credit (debit) account 84 "Retained earnings (uncovered loss)". There is an inextricable relationship between accounts 99 "Profit and loss", 84 "Retained earnings (uncovered loss)" and the indicator of net profit (loss).
The aggregate financial result, reflected in the statement of financial performance, should be understood as the financial result, which is the difference between all the income and expenses of the organization for the reporting period, not related to the activities of the owners (shareholders).
The aggregate financial result of the organization includes realized and unrealized gains (losses). The realized profit (loss) represents the net profit (loss) reflected in the income statement in line 2400 “Net profit (loss)”.
The activities of the owners should be understood as the direct actions of the owners aimed at increasing the share capital, obtaining share premium, reducing capital, buying back own shares from shareholders, and accruing dividends in favor of the owners.
Due to all of the above, we can conclude that the cumulative financial result for the period is the amount:
Profit (loss) for the period received from the ordinary activities of the organization;
Other comprehensive income, i.e. other items that are not included in the profit (loss) received from the ordinary activities of the organization, since their recognition in profit (loss) cannot yet be recognized. These items cannot be recognized, since they are not fully controlled by the organization and are external to the organization.
The report on line 2500 "Aggregate financial result of the period", the form of which was approved by Order of the Ministry of Finance of Russia dated July 2, 2010 No. 66n "On the forms of financial statements of organizations", indicates an indicator representing the net profit (loss) of the organization, adjusted for the results from revaluation of non-current assets and other transactions not included in the net profit (loss) of the reporting period, i.e., including the following indicators:
- (line 2510);
Result from other operations not included in the net profit (loss) of the period (line 2520).
Since 2011, the revaluation of fixed assets is carried out on the last day of the reporting year. If the amount of additional capital received in the course of a revaluation carried out earlier has not been formed for an item, the amount of the markdown is reflected in other expenses. If the revaluation is carried out within the amounts of the previous markdown, and these amounts have already been charged to the financial result, the revaluation amount is reflected in other income. In these cases, line 2510 is left blank. If the markdown or revaluation is reflected at the expense of the amounts of additional capital, then such amounts must be indicated in line 2510 of the "For reference" section of the statement of financial results.
It can be assumed that one of the possible constituent elements the indicator “result from other transactions not included in the net profit (loss) of the period” may be the difference that arises from the restatement of the value of assets. If an organization operates outside Russia and uses its assets, then their value in foreign currency need to be converted into rubles. The resulting difference is not included in income and expenses of the period, but is reflected at the expense of additional capital.
It is believed that line 2520 includes the amounts of material errors of the previous reporting year, identified after the approval of the financial statements for that year. Such mistakes are corrected by turns current period on the relevant items in correspondence with account 84 "Retained earnings (uncovered loss)" (PBU 22/2010). This is not considered fair. Comparable indicators for previous periods (including retained earnings (uncovered loss), indicators of the statement of financial results) are subject to adjustment at the reporting level (clause 9 of PBU 22/2010) and the information is disclosed in the notes.
Using all of the above, you can present the formula for calculating the indicator of the aggregate financial result of the period:
SFR \u003d CP (U) ± RPVA ± RPO (1)
where, PE (U) - net profit (loss);
RPVA - the result from the revaluation of non-current assets,
not included in net profit (loss);
RPO is the result from other transactions not included in the net profit (loss) of the period.
Table 1 reflects the results of the activity of LLC "Anpris" in Krasnodar for 2012.
Let's calculate the aggregate financial result using the example of LLC Anpris, Krasnodar, the main activities, which are retail food products and organization catering... In 2012, the net profit (loss) of Anpris LLC amounted to RUB 4,959 thousand. Since the organization we study did not revalue non-current assets in the reporting year and does not need to recalculate the value of assets in foreign currency, the aggregate financial result will be 4,959 thousand rubles.
Table 1 - Results of activity of LLC "Anpris", Krasnodar, thousand rubles.
|
Index |
|||
|
Cost of sales |
|||
|
Gross profit (loss) |
|||
|
Business expenses |
|||
|
Profit (loss) from sales |
|||
|
Other income |
|||
|
other expenses |
|||
|
Net income (loss) |
|||
|
Result from revaluation of non-current assets, not included in net profit (loss) of the period |
|||
|
Result from other operations not included in the net profit (loss) of the period |
|||
|
Aggregate financial result of the period |
Let us also consider the calculation of the aggregate financial result indicator using the example of the organization of JSC Detsky Mir-Center in Moscow.
Open Joint Stock Company Detsky Mir-Center does not conduct joint activities.
With the general trend in the development of the trade business towards consolidation and the creation of large chain supermarkets, as well as the success of the first Russian retail chains built on the western model, the corresponding movement in the segment of children's goods has not yet begun. Therefore, Detsky Mir - Center OJSC was the first to take steps to create a national chain of stores in children's goods, which will make it possible to become the undisputed leader both in capturing the Moscow market and in regional expansion. The value of this opportunity is great, because it is known that the companies that entered the market first, as a rule, retain the leading position in it afterwards.
The company carries out the following activities:
Organization and implementation of retail and wholesale trade consumer goods, industrial and agricultural products;
Creation and organization of the activities of a chain of stores, public catering enterprises, trade wholesale and retail enterprises and divisions;
Implementation of trade, trade and procurement, as well as intermediary activities;
Organization, financing and carrying out research, development, as well as construction, repair and construction and commissioning works;
Consulting on business and management issues and other activities.
The results of the activities of JSC Detsky Mir-Center are presented in Table 2.
According to the data in Table 2, the net profit of the OJSC Detsky Mir-Center in 2012 amounted to 420,461 thousand rubles. In the reporting year, the organization studied by us did not revalue non-current assets, and the result from other operations not included in the net profit (loss) of the period is equal to 7422 thousand rubles.
Table 2 Results of activities of JSC "Detsky Mir-Center", Moscow, thousand rubles.
|
Index |
|||
|
Cost of sales |
|||
|
Gross profit (loss) |
|||
|
Business expenses |
|||
|
Administrative expenses |
|||
|
Profit (loss) from sales |
|||
|
Income from participation in other organizations |
|||
|
Interest receivable |
|||
|
Percentage to be paid |
|||
|
Other income |
|||
|
other expenses |
|||
|
Profit (loss) before tax |
|||
|
Current income tax |
|||
|
Changes in deferred tax liabilities |
|||
|
Changes in deferred tax assets |
|||
|
Net income (loss) |
|||
|
Result from revaluation of non-current assets, not included in net profit (loss) of the period |
|||
|
Result from other operations not included in the net profit (loss) of the period |
|||
|
Aggregate financial result of the period |
From the presented table 2 it can be seen that the studied organization did not perform a revaluation, and the result from other operations amounted to 7422 thousand rubles.
Based on the calculation of the indicator studied by us, the aggregate financial result is 413,039 thousand rubles. (420 461 thousand rubles - 7422 thousand rubles).
Ultimately, we can conclude that the indicator "Cumulative financial result of the period" will allow:
Increase the information content of accounting financial statements, namely the statement of financial results;
Improve the quality and efficiency of management decisions made by internal and external users of reporting.
Changes in the "Reference" section of the statement of financial results bring domestic system accounting and reporting to international standards financial statements, which also affects the reliability of financial statements and facilitates the transformation of financial statements into IFRS format.
List of references
1. Akasheva V. V. Formation of the aggregate financial result joint stock company in Russian and foreign practice and in accordance with IFRS [Text] / V. V. Akasheva, A. A. Oginova // Young scientist. - 2013. - No. 7. - S. 131-133.
2. Bashkatov, V.V. Perfection accounting financial results using PBU 18/02 (on the example of OJSC Krasnodar Plant Neftemash) // V.V. Bashkatov. - "The Earth is our Home" - Materials of the fourth regional student scientific-practical conference (April 9, 2009, Anapa). - Krasnodar: AF KubGAU, 2009. - p. 215 - 217
3. Kasyanova, G. Yu. main book accountant. // Kasyanova G. Yu. M :, 2014 .-- 272 p.
4. Larionov, AD Accounting financial statements .// Larionov, AD, Karzaeva, NN .. M :, 2006. - 208 p.
5. Sigidov, Yu.I. Accounting (financial) statements / ed. Yu.I. Sigidova, A.I. Trubilina. - M., 2012 .-- 366 p.
6. Sigidov, Yu.I. Tax accounting and its relationship with other accounting systems // Yu.I. Sigidov, V.V. Bashkatov. - Accounting in agriculture... - 2012. - No. 4. - p. 27 - 30.
1. Akasheva VV Formirovanie sovokupnogo finansovogo rezul "tata akcionerno-go obshhestva v rossijskoj i zarubezhnoj praktike iv sootvetstvii s MSFO / VV Akasheva, AA Oginova // Molodoj uchenyj. - 2013. - 13 ...
2. Bashkatov, V.V. Sovershenstvovanie buhgalterskogo ucheta finansovyh rezul "ta-tov s primeneniem PBU 18/02 (na primere OAO Krasnodarskij zavod" Neftemash ") // VV Bashkatov. -" Zemlja - nash sk Dom "- Materialy chetvertoj regional-nash-dom konferencii (9 aprelja 2009 g., g. Anapa). - Krasnodar: AF KubGAU, 2009 .-- s. 215 - 217
3. Kas "janova, G. Ju. Glavnaja kniga buhgaltera. // Kas" janova G. Ju. M :, 2014 .-- 272 s.
4. Larionov, A. D. Buhgalterskaja finansovaja otchjotnost ". // Larionov, A. D., Kar-zaeva, N.N .. M :, 2006. - 208 s.
5. Sigidov, Ju.I. Buhgalterskaja (finansovaja) otchjotnost "/ pod red. Ju. I. Sigidova, A. I. Trubilina. - M., 2012. - 366 s.
6. Sigidov, Ju.I. Nalogovyj uchet i ego vzaimosvjaz "s drugimi uchetnymi sistema-mi // Ju.I. Sigidov, V.V. Bashkatov. - Buhuchet v sel" skom hozjajstve. - 2012. - No. 4. - s. 27 - 30.
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Line 2520 reflects the result from other transactions that is not included in the net profit (loss) of the period. This line may indicate all the amounts of this year reflected in the capital accounts (accounts 80, 83, 84), with the exception of amounts relating to relations with founders (for contributions to authorized capital, payment of dividends, increase in authorized capital, etc.).
For the specified line, the amount of exchange rate differences arising from the foreign economic activity of the organization, that is, the amounts that appeared in the accounting in connection with the introduction of changes from 2011 by Order N 186n in PBU 3/2006, should be given.
For example:
In the first quarter of 2011, the organization corrected significant errors of previous years (for example, 2008 and 2009, but before 2010), revealed after the approval of the annual financial statements (clause 9 of PBU 22/2010). These amounts must be reflected on account 84 with the recalculation of the comparative indicators of the financial statements for these previous reporting years.
These amounts of adjustments are not reflected in line 2520, since they do not relate to the aggregate financial result for the 1st quarter of 2011. They adjust retained earnings of previous years.
Line 2520 reflects the change in the amount of the organization's capital for the reporting period, except for:
Net profit (loss) of the reporting period;
Changes in additional capital as a result of revaluation of non-current assets;
Increase or decrease of the authorized capital (Art. Art. 28, 29 of the Law N 208-FZ, Art. Art. 17, 20 of the Law N 14-FZ);
The exchange rate difference arising from settlements with the founders, if the contribution to the authorized capital is provided in foreign currency (clause 14 of PBU 3/2006);
Share premium (clause 68 of the Regulations for the Organization's Accounting and Reporting, Instructions for the Application of the Chart of Accounts).
Taking into account the listed exceptions, a change in the amount of capital is possible due to an increase / decrease in additional capital indicators (except for the revaluation of non-current assets) and retained earnings (uncovered loss) not related to the occurrence of income and expenses on common types activities, as well as with the emergence of other income and expenses.
Such operations include:
Correction in accounting of significant errors of the previous reporting year, revealed after the approval of the financial statements for this year (subparagraph 1 of paragraph 9 of PBU 22/2010);
Conversion into rubles of the value of the assets and liabilities of the organization used to conduct business outside the Russian Federation, expressed in foreign currency, with the occurrence of a difference included in extra capital organizations (paragraph 2, clause 19 PBU 3/2006).
Correction in the reporting period of significant errors of the previous reporting year, identified after the approval of the financial statements for this year, leads to a change by the same amount of retained earnings (uncovered loss) indicators at the last reporting date and December 31 of the year preceding the reporting year.
The above transaction does not affect the aggregate financial result of the reporting period and should not be reflected in line 2520 "Result from other transactions not included in the net profit (loss) of the period".
Consequently, this line will reflect only the difference from the translation into rubles of the value of the organization's assets and liabilities expressed in foreign currency used to conduct business outside the Russian Federation, which is included in the additional capital of the organization in accordance with para. 2 p. 19 PBU 3/2006.
Line 2500 "The cumulative financial result of the period"
This line indicates an indicator representing the net profit (loss) of the organization, adjusted for the results from the revaluation of non-current assets and other transactions, not included in the net profit (loss) of the reporting period.
When preparing interim financial statements for the reporting periods of 2011, the indicator of line 2500 "The cumulative financial result of the period" is equal to the indicator of line 2400 "Net profit (loss)" in the absence of an indicator on line 2520.
If the cumulative financial result is a loss, then it is shown in the Profit and Loss Statement in parentheses.
The key figure of line 2500 "Cumulative financial result of the period" (for the same reporting period of the previous year) is transferred from the income statement for this reporting period of the previous year.
When compiling accounting statements for the reporting periods of 2011, the indicator of line 2500 "The cumulative financial result of the period" (for the same reporting period of the previous year) is determined as the sum of the indicators of lines 2400 "Net profit (loss)", 2510 "Result from revaluation of non-current assets, not included in the net profit (loss) of the period "and 2520" Result from other transactions not included in the net profit (loss) of the period "for the same reporting period of 2010 of the Profit and Loss Statement for 2011
Line 2900 "Basic earnings (loss) per share"
Basic earnings (loss) per share is defined as:
Basic profit (loss) of the reporting period;
The weighted average number of ordinary shares outstanding during the reporting period.
Line 2910 "Diluted earnings (loss) per share"
This line contains information on diluted earnings (loss) per share, which reflects a possible decrease in the level of basic profit (increase in loss) per share in the subsequent reporting year.
- Capital movement
Form 0710023 p. 3
2. Adjustments due to the change accounting policies and bug fixes
Reference information is presented in a separate table to the profit and loss account.
|
Explanations |
Indicator name |
Line code | ||||||||||
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REFERENCE | ||||||||||||
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Result from revaluation of non-current assets, |
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not included in the net profit (loss) of the period |
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Result from other operations, not included | ||||||||||||
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to the net profit (loss) of the period |
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Aggregate financial result of the period | ||||||||||||
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Basic earnings (loss) per share | ||||||||||||
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Diluted earnings (loss) per share | ||||||||||||
From the reporting for 2011, the section "For reference" includes:
Result from revaluation of non-current assets, not included in the net profit (loss) of the period (line 2510);
Result from other operations not included in the net profit (loss) of the period (line 2520);
The cumulative financial result of the period (line 2500).
In addition, the section indicates:
Basic profit (loss) per share (line 2900);
Information about diluted earnings (loss) per share (page 2910).
The cumulative financial result of the period is determined as the sum of the lines "Net profit (loss)", "Result from the revaluation of non-current assets not included in the net profit (loss) of the period" and "Result from other operations not included in the net profit (loss) of the reporting period ".
P. 2510. If in the current period a revaluation of fixed assets was carried out and the revaluation is attributed to additional capital, it is shown under the balance sheet item "Revaluation of fixed assets" in section III "Capital and reserves". But it will be important for shareholders to know that in the current period the company's value has increased as a result of the increase market value fixed assets owned by the company. In other words, the potential profit received this year has increased, including due to revaluation, which, according to the rules of PBU 6/01, does not refer to retained earnings of the current period, but refers to capital.
International practice follows the path of combining all components of comprehensive income in a single profit and loss statement - IAS 1 "Presentation of Financial Statements". Unlike IFRS, where you can count a dozen types of transactions that are not included in profit or loss (components of other comprehensive income), in Russian accounting so far there is only a revaluation of non-current assets in this respect. Therefore, the addition of the statement of financial results with the line "Result from other operations not included in the net profit (loss) of the reporting period" is relevant only for a small number of companies.
Basic earnings (loss) per share (line 2900) are calculated by joint stock companies in accordance with the Methodological Recommendations for Disclosure of Information on Profit Per Share, approved by order of the Ministry of Finance of Russia dated March 21, 2000 No. 29n.
Basic earnings per share reflects the portion of the reporting period's profit attributable to shareholders who own ordinary shares. The calculation of profit attributable to preferred shares is carried out in accordance with the constituent documents (methodological recommendations have not been considered).
Basic earnings per share is determined by dividing the basic profit (loss) of the reporting period by the weighted average number of ordinary shares outstanding during the reporting period.
Underlying profit is understood as the portion of profit remaining after all taxes and dividends on preferred shares have been paid. The weighted average number of ordinary shares is determined by dividing the number of ordinary shares in circulation on each 1st day of the month of the reporting period by the number of months in the reporting period.
Example. At the beginning of the reporting period, the number of outstanding ordinary shares was 15,000; On July 1, the organization bought 3,000 shares from shareholders, and on September 1, an additional issue took place, which amounted to 7,500 shares.
KOA \u003d 15,000 pcs. x 6 months + 12,000 pcs. x 2 months + 19 500 pcs. x 4 months \u003d\u003d \u003d 192000pcs. : 12 months \u003d 16000pcs. KOA is the number of ordinary shares.
If the net profit (NP) is equal, for example, 480,000 rubles, then the basic earnings per share (BPA) \u003d 480,000 rubles. : 16,000 pcs. \u003d RUB 30
Diluted earnings per share (line 2910) - a value that reflects a possible decrease in the level of basic earnings per share in the reporting period. Dilution of earnings per share is a decrease in earnings that may result from:
Conversion of securities issued by the company (preferred shares, bonds, etc.) into ordinary shares;
Fulfillment by the company of the contract of purchase and sale of ordinary shares from the issuer at a price below their market value;
Additional issue of ordinary shares, etc. In contrast to basic earnings per share, diluted earnings show a possible worst case scenario. This information serves as a warning to shareholders that the lower profits of the company will be spread over more shares, i.e. diluted.
Example.Net profit of the organization (PE) \u003d 480,000 rubles. Weighted average number of ordinary shares outstanding \u003d 16,000. Bonds, each convertible into 1.5 ordinary shares \u003d 1000 pcs. Interest payment on bonds RUR 20 b x 1000 pcs. \u003d 20,000 rubles. Adjustment of net profit \u003d 480,000 rubles. + 20,000 rubles. \u003d RUB 500,000 The number of ordinary shares as a result of the conversion of bonds \u003d \u003d 16000 pcs. + 1000pcs. x 1.5 pcs. \u003d 17500pcs .;
BPA \u003d 480,000 rubles. : 16,000 pcs. \u003d 30 rubles;
Development PA \u003d 500,000 rubles. : 17,500 pcs. \u003d 28.57 rubles.
If additional shares are placed in the reporting year, then the basic and diluted earnings are adjusted. If the additional issue took place after the reporting date, but before the signing of the statements, then information about this should be disclosed in the explanatory note.
IN in order to disclose the content of other income and expenses that form the financial result of the organization's activities, if they are material, one of two options can be chosen:
Can be disclosed directly in the income statement by detailing the relevant items;
In the explanations to the profit and loss statement, provide a breakdown of the lines of the Profit and Loss Statement, which reflect certain types of profit and loss.
The aggregate financial result is regulated, inter alia, by international regulations... In June 1997, the FASB issued Financial Accounting Standard (SFAS) 130, Reporting of Aggregate Financial Results. This provision established certain standards for reporting and reporting on total income in general purpose financial statements.
SFAS # 130 was issued in response to concerns from users of financial statements that certain changes in assets and liabilities are not included in the statement of income, but appear in the statement of changes in equity. The objective of SFAS # 130 was to ensure that all items that meet the definition of aggregate financial result are displayed in an understandable manner for the same period in which they were recognized.
In accordance with the definition given in the Regulation on Financial Accounting Concept No. 6, the aggregate financial result should have included all changes in equity that arises from transactions with non-owners. The aggregate financial result can be defined as:
Aggregate financial result \u003d Net profit + Other cumulative financial result
In accordance with the requirements of SFAS No. 130, other comprehensive financial result is part of the total comprehensive financial result, but in general it is excluded from net income. Prior to SFAS 130, these adjustments were disclosed as separate components. equity capital in balance. In accordance with SFAS No. 130, they must be presented as other comprehensive income.
The purpose of SFAS No. 130 is set out in the following quotation from the standard: “if information about the aggregate financial result of a period is disclosed with the relevant explanations and other information contained in the financial statements, it will assist investors, creditors and other users of financial statements in assessing the economic performance of the enterprise and determining values \u200b\u200bof future cash flows ".
Although the FASB requires “an entity to show the total comprehensive financial result and its components in the financial statement,” it did not specify what format is required, except that net income should be shown as a component of the total financial result in that financial statement. financial reporting. In accordance with the requirements of SFAS # 130, three alternative formats are permitted for presenting the other cumulative financial result and the total cumulative financial result:
1. Below is the line for net income in the traditional income statement (in the combined income statement and cumulative income statement).
2. In a separate statement of comprehensive income, which begins with the amount of net income for the year.
3. In the statement of changes in equity.
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