Abstract
The paper discusses the concepts and meaning of comprehensive income, clean surplus relation, all-inclusive income, current operating income, clean income and dirty surplus. These are discussed from a theoretical standpoint, demonstrating their conceptual divergence as well as their varied applications, either through valuation models based on company accounting figures or reported accounting income. Then examples of accounting rules and standards referring to these concepts are analyzed, showing that in the United States and United Kingdom these concepts are already reported in specific financial statements. In addition, international empirical studies on the subject are reported and applied to calculations for the Brazilian financial sector for the 2001-2004 period, in function of new regulations on appropriation of the appreciation of securities through direct recording in the equity accounts. Evidence is found that the total increment in equity was not recognized in the accounting results disclosed, and the difference was greatest in the period immediately after the regulatory change.
Highlights
The determination and disclosure of accounting income, one of the main objectives of accountancy, has undergone major changes as the conceptual discussion of this accounting/economic aggregate has evolved
We analyze the relation between the income reported in the income statement and the comprehensive income calculated by the net worth values for Brazilian financial conglomerates, for the period from 2001 to 2004
We did not find in the principles and rules of the Brazilian accounting regimes examined – or even in the proposals for international convergence of accounting standards – a report that articulates and displays the “clean surplus” / “income for the period” relation, represented by the equation below
Summary
The determination and disclosure of accounting income, one of the main objectives of accountancy, has undergone major changes as the conceptual discussion of this accounting/economic aggregate has evolved. This discussion is not restricted to the concept of the result of a company’s economic activity. Differences exist in the concepts found in various countries and regulatory bodies, whether regarding application of accounting principles or resulting from different cultural patterns These differences exist in spite of efforts in the field of corporate accountancy to converge practices in the measurement and reporting of accounting income. Such diversity fits in the broader theoretical spectrum of financial accounting, given that the central idea of this theory is based on producing information that is useful to all the publics that make use of it, such as investors, creditors, government agencies, tax authorities, customers, suppliers and employees
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