Proceedings

This study is structured in the following way: the first part carries aut a brief history
on the comprehensive income since the emergence of the concept up to present, the
second part summarizes the literature review focused on the statement of
comprehensive income, the third part explains the research methodology, and the
fourth part focuses on presenting the results obtained from the data collected and the
discussions that are appropriate. The paper concludes with the authors' conclusions
regarding the importance given by professional investors to net income versus
comprehensive income.
1. BRIEF HISTORY CONCERNING THE STATEMENT
OF COMPREHENSIVE INCOME
The term comprehensive income appeared for the first time in 1980 in the American
legal texts (SFAC 3). Five years were necessary so that the term ‘comprehensive
income’ should be defined for the first time in 1985 in Concepts Statement 6 Elements
of Financial Statements as:
"the change in equity of a business enterprise during a period from transactions
and other events and circumstances from nonowners sources. It includes all
changes in equity during a period except those resulting from investments by
owners and distributiond from owners”.
If the definition of this concept required five years, its implementation required 12
years, SFAS 130 Reporting Comprehensive Income applied to financial years
beginning after December 15, 1997.
In the U.S., SFAS 130, requires companies to disclose the comprehensive income in a
primary financial statement, but allows the disclosure of the comprehensive income
either in a performance or nonperformance statement. The comprehensive income
includes the effects of all performed operations and of all acts that occurred during the
year, relating themselves to the current operation or not and having contributed to the
increase or decrease in equity (excluding the shareholders’ contributions or their
associates’ contributions and the distributions to them). Any gains or losses recorded
in the year, realized or not, exceptional or extraordinary, contribute to the economic
entity's performance and should be included in the statement of comprehensive
income. By adopting the comprehensive income, the FASB abandons the concept of
profit and loss account and directs its attention to the balance sheet. This does not
mean that the American standards give a greater importance to the balance sheet (it
belongs to users and not to regulators) but that translates a conceptual shift with such
important consequences that FASB felt obliged to foresee compromises and steps to
ensure the transition.
The U.S. format of comprehensive income statement was the consequence of heated
debates between two different points of view: on the one hand, the FASB that
supported the disclosure of the comprehensive income statement as reflecting the
performance of the entity and on the other hand, board members who indicated that
the presentation of comprehensive income in a performance statement would enhance
its visibility, thereby increasing investors' use of this information, which is why they
supported the disclosure of comprehensive income statement as a change in equity. As
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