Abstract
The objective of this study is to analyze which the consequences in the ROA (Return on Assets), when of the use of different forms of measurement of the income. The forms of measurement, approached in this work, are: the accounting operational income, comprehensive income and net income. The North American accounting standards (US GAAP) make possible the use of the two first forms while what and the Brazilian legislation (Lei 6.404/76) establishes the application of third. The work present the three forms of measurement of the income aiming at to answer which the consequences in the ROA for the use of different forms of measurement of income? The main similarities and differences between the three concepts inhabit in the following aspects: value of measurement of the costs and expenditures; consideration of extraordinary items as integrant of the result or of the Equity; the accounting treatment of deriving contributions of not controlling shareholders or of third with characteristics of capital reserve. The ROA is calculated from the income presented for the company, and then the form of used measurement will influence the analysis of this pointer.
Highlights
Seeking to meet the different objectives of measuring profit, American legislation allows it to be reported in two ways
The profit is defined as the result of the common shareholders, which according to Hendriksen and Van Breda (1999, p.208), is obtained by the “(...) total variation in the value of the capital stock, recognized by the register of transactions and revaluation of the company during a determined period, except for payment of dividends and capital increases or decreases”, besides the earnings of minority or preferred shareholders
Having presented the three forms of showing profits, we examine Return on Assets (ROA) to permit a discussion of the differences caused in the accounting information by the profit reporting choice
Summary
He development of companies is leveraged by investors, but for this to occur they. T must have positive expectations and confidence. The Financial Accounting Standards Board (FASB), the body responsible for accounting regulation in the United States, issued Statement of Accounting Standard (SFAS) 130 – Reporting Comprehensive Income, in June 1997, regulating the disclosure of comprehensive income of American companies Another way of presenting companies’ results is discussed by Edwards and Bell (1973), denominated current operating income, which because of the difficulties of determining current values, was adapted to show the accounting income. Law 6404/76 (the basic Law of Corporations), determines the way of presenting profit, mixing the two concepts presented above, so that the result obtained neither demonstrates the generation of wealth nor the maximization of the result This makes it hard to evaluate the performance of Brazilian companies under either of these lights. There is an explanation of ROA, followed by the accounting information of the selected firms, and the ROA is calculated employing the three ways of measuring profit
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