International Pronouncements on financial statements presentation

An enterprise reports its results of operations in a set of financial statements that includes an income statement. The format of the income statement and its components of income have been the subject of controversy, and as a result numerous pronouncements of professional accounting bodies have addressed related issues. For the most part the central issues discussed in these pronouncements involve the distinction between normal recurring items of profit and loss and other items that affect the determination of income.

One such pronouncement, Accounting Principles Board (APB) Opinion No. 9, “Reporting the Results of Operations,” states that net income reported on an income statement should reflect all items of profit and loss recognized during the period with the exception of prior period adjustments. The APB also refined the appropriate reporting format in APB Opinion No. 30, “Reporting the Results of Operations—Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions.” Both of these Opinions required that extraordinary items, as defined in Section 6.3, be segregated from the results of continuing and ordinary operations of the entity. Opinion No. 30 expanded the categories to be segregated from continuing and ordinary operations by specifying the treatment of discontinued operations and unusual or infrequently occurring items.