Reporting Comprehensive Income: Evidence from Malaysian ACE Market Companies

Abstract

In Nov 2009, MASB released FRS 101, Presentation of Financial Statements, effective for fiscal years beginning on or after 1 January, 2010. This standard established certain rules for reporting and presenting comprehensive income in the general-purpose financial statements. FRS 101 prescribed two alternative formats for the presentation without mandating any one specific format. FRS 101 also required certain details of comprehensive income to be displayed prominently in the financial statements. The current study examined the presentation of comprehensive income by a sample of companies traded on the ACE market of the Bursa Malaysia (Malaysian Stock Exchange) to determine the predominant method of presentation among these companies, just one year after FRS 101 became effective. Using a sample of 84 non-financial companies an example of each format is provided and the choices of format made by the companies are analyzed. The study showed that 82 (98%) companies used a first format which combined the statement of net income and comprehensive income (using a single statement of comprehensive income), while only 2 (2%) companies used the second format which favored the presentation of comprehensive income in a separate statement. Sixty-three percent of the companies (32 out of 51) were negatively affected by the foreign currency translation adjustment. Further, the paper also discusses some ancillary findings pertaining to the presentation of the details of comprehensive income.