Bridge over troubled water: Is it possible to define other comprehensive income?

Author/s Thomas Ryttersgaard
Publishing Year 2021 Issue 2021/1
Language English Pages 27 P. 61-87 File size 104 KB
DOI 10.3280/FR2021-001003
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Although other comprehensive income did not exist in the conceptual framework until 2018, it has been a part of IFRS for many years, and it has not been defined based on accounting theory. This paper considers arguments for the current use of other comprehensive income under IFRS and finds that matching and prudence are at the core of other comprehensive income in IFRS despite not being elements of the conceptual framework. This suggests that the concept of other comprehensive income exists because the IFRS standards are founded on a mix of balance sheet-based and income statement-based accounting principles. Based on the characteristics of other comprehensive income and the IASB’s arguments for the recognition of gains and losses in other comprehensive income, this paper proposes a definition of other comprehensive income that can be used to ensure a uniform application of the concept across accounting standards and to reduce risks of inconsistency.

Keywords: Financial reporting, other comprehensive income, conceptual framework, measurement

Jel codes: M41

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Thomas Ryttersgaard, Bridge over troubled water: Is it possible to define other comprehensive income? in "FINANCIAL REPORTING" 1/2021, pp 61-87, DOI: 10.3280/FR2021-001003