Corporate Earnings Reports

It is one of significant financial reporting concerns to present all financial performance in the constantly changing economic environment. Traditional income statement which is based on historical costs principle, realization principle and conservation principle can only report for a period of time realized income and seriously lags behind the economic events occurred. Therefore, it doesn't meet the needs for financial performance information of users of financial statements in the 1990s and beyond. The Accounting Standard Board (ASB), the Financial Accounting Standard Board (FASB) and the International Accounting Standard Council (IASC) had taken measures to improve traditional income reporting and required to report comprehensive financial performance in so called 'the forth financial statement' or 'statement of comprehensive income '.Nowadays there are different views on many respects of income reporting , such as which items should be in or outside net income ,which items should respect on the face of statement of comprehensive income ,and the issue of recycling ,and so on.A project on reporting financial performance by business enterprises had been proposed to the FASB in August, 2001.The principal reason for the project is to address significant financial reporting concerns raised by constituents of the FASB .The use of alternative and inconsistent measures is often confusing and sometimes misleading, and that's also a reason of it. Another reason for it is to take advantage of a timely opportunity for a coordinated project with the IASB, which together with the ASB added a project on performance reporting to its initial agenda in 2001. The IASB and FASB agreed to study jointly on the performance reporting in April, 2004.The project had address all required financial statements that constitute a complete set of financial statements, So the IASB decided to change the project's title to 'Financial Statement Presentation' to reflect that it encompasses all of the financial statements, not just the statement of recognized income and expense in March, 2006. At present, this project is under consideration, and internationally the study on income or performance reporting is still in process.In China, more and more people focus on the innovation of the performance reporting happened in western developed countries. Their papers and books on income reporting mainly introduce and review the comprehensive income view, there's few systematic research on it.In the current practice of China, determination of income is primarily based on historical costs and the revenues are recognized only when they are realized. There is a wide gap between our requirements and those of the relevant standards of USA, UK and IASB. Although the Accounting Standards for Business Enterprises of China had been published in February, 2006, there are still some differences between our income reporting and other standard setters'. This dissertation is to address some questions. Those questions include: what are required on income reporting by business enterprises in China, What are in common or not on income reporting, and is it necessary to improve and how to improve our income reporting, and how to use the experiment and relevant research of other countries for reference, and so on. The comparative and applied study on income reporting is necessary and desirable now.This dissertation is divided into four chapters:In the first chapter, it introduces the meaning and functions of the income, discriminates basic theories on income which include the revenue-expense view and the asset-liability view that are two views to determine income, the domain of period-income, the characteristics of traditional income determination, and so on.In the second chapter, it introduces the definition and characteristics of comprehensive income, analyzes the bases for comprehensive income. In the end of this chapter, it discusses the recognition and measurement of comprehensive income.In the third chapter, it focuses on comprehensive income reporting. It makes a comparison of the relevant requirements on comprehensive income reporting among UK's FRS3, FASB's FAS130 and IASC's IAS1, and then it gives a detailed introduction of the FASB and IASB's separate project and their jointly project on reporting financial performance. After that, it makes an overall review of them. In the end of the chapter, it makes a summary of enlightment from these researches.In the last chapter, it discusses how to improve income reporting by business enterprises in China. Firstly, it analyzes the major characteristics and problems on income reporting in current practice. Secondly, it raises and deliberates some theorical and practical issues on improving our income reporting. Those issues include: objectives of financial reporting in China, trade-offs between relevance and reliability, consideration on how to resolve the reliability and the adaptability of the comprehensive income reporting in China, and so on. In the end, it gives the outline and detailed measures for improving income reporting, it indicates we should establish standards on presentation of comprehensive income and then consider overall standards on it which would be issued only if it has qualifications for application, such as fair value widely applied in practice. It suggests proceeding in an orderly way and step by step on improving income reporting.