The Handbook to IFRS Transition and to IFRS U.S. GAAP Dual Reporting

4.4 STRUCTURE OF THE STATEMENT OF INCOME

4.4.1 Aggregations of Income and Expenses

The IASB Framework sees subclassifications on the face of the financial statements as relevant, especially when based on source of activities (e.g., ordinary versus incidental activities), to assist users of financial reporting in projecting future cash flows.92 The U.S. Concepts view a balanced trade-off between classifications and aggregations in financial statements as a way of discriminating recognized elements by homogeneous characteristics, such as recurrence, stability, risk, predictability and reliability, with the purpose, again, of facilitating the forecasting of cash flows. Hence, division in components is useful.93

Both the IASB Framework and the U.S. Concepts see the detailing of statements of income and their combinations as intermediate measures of performance and of its variability. Examples are gross margin, profit or loss from ordinary activities (under CON 6, income from continuing operations) before or after tax, operating income (CON 6), and profit or loss (IASB Framework), or their derivations, such as return on investment or earnings per share.94

IAS 1 permits, even encourages, the customization of terminology, sorting, detailing and the identification of components of financial performance, depending on recurrence, degree of loss or gain probability, predictability, materiality, nature and function of items.95 However, profit or loss, and comprehensive income (and, from annual ...