TaxCorporate Tax‘Bottom line’ will always be retained

'Bottom line' will always be retained

Despite proposed corporate income statement changes, a 'bottom line' earnings figure will always be retained, says an IASB member

A ‘bottom line’ earnings figure of some kind will always be retained, an
International Accounting Standards Board member has said, as rows over changes
to corporate income statements flared this week.

Jan Engström told Accountancy Age that plans to revamp the income
statement would merely see a ‘new type of bottom line’ emerge if implemented,
rather than do away with it.

A group of investors,
the corporate reporting
users’ forum

(CRUF), this week
wrote to the IASB objecting to proposals to draw up a more comprehensive
earnings figure ahead of a report into the issue by the board.

The letter said: ‘We disagree with the proposal that there should not be an
earnings sub-total within a performance statement. We find an earnings sub-total
particularly useful in enabling management to communicate with us.’

Among proposals mooted in recent months have been the idea of a comprehensive
income statement encompassing all balance sheet movements. This is regarded as a
radical suggestion, even by insiders at the IASB, and investors fear it would
make it more difficult to compare underlying performance in companies.

Engström said the proposal was at ‘the most drastic’ end of possiblities.

Companies also back CRUF’s concerns, saying the figure is important,
according to research by PricewaterhouseCoopers set to be published soon.

A total of 85% of corporate respondents and close to 80% of investment
professionals found earnings numbers to be useful, while 60% of both corporate
respondents and investment professionals did not think that ‘other comprehensive
income’ is a useful number.

The IASB is set to issue a report into the income statement early next year.

Related Articles

Big names, little tax: Airbnb, Facebook, Kellogg’s, eBay

Corporate Tax Big names, little tax: Airbnb, Facebook, Kellogg’s, eBay

2m Alia Shoaib, Reporter
New trading allowance: simplicity, but not as we know it

Administration New trading allowance: simplicity, but not as we know it

2m Emma Rawson, ATT Technical Officer
EU divided over radical tax reforms targeting tech giants

Corporate Tax EU divided over radical tax reforms targeting tech giants

2m Alia Shoaib, Reporter
‘Improve rather than lose’ disincorporation relief, tax body urges

Administration ‘Improve rather than lose’ disincorporation relief, tax body urges

2m Austin Clark, Reporter
How to educate your clients about tax avoidance

Corporate Tax How to educate your clients about tax avoidance

2m Clear Books | Sponsored
CGT clampdown nets HMRC £124m – but could lead to increase in use of avoidance schemes

Corporate Tax CGT clampdown nets HMRC £124m – but could lead to increase in use of avoidance schemes

3m Austin Clark, Reporter
‘Google tax’ nets HMRC £281m

Corporate Tax ‘Google tax’ nets HMRC £281m

3m Emma Smith, Managing Editor
Should I incorporate my buy-to-let business?

Corporate Tax Should I incorporate my buy-to-let business?

4m Emma Rawson