Title: Exploring the usefulness of comprehensive income: an empirical study

Authors: Yaser Ahmad Fallatah, Mohammad Talha

Addresses: Department of Accounting & MIS, College of Industrial Management, King Fahd University of Petroleum & Minerals, KFUPM Box 796, Dhahran – 31261, Saudi Arabia. ' Department of Accounting & MIS, College of Industrial Management, King Fahd University of Petroleum & Minerals, KFUPM Box 366, Dhahran – 31261, Saudi Arabia

Abstract: Statement of Financial Accounting Standards (SFAS) No. 130 and the International Accounting Standards Board (IASB) require companies to report their comprehensive income in their primary financial statements. The Financial Accounting Standards Board (FASB) permits companies to present comprehensive income in three different ways: 1) in the income statement; 2) in a separate statement of comprehensive income; 3) in the stockholders| equity statement. This paper focuses on testing whether the new comprehensive income reporting formats affect users| judgement when valuing companies. The results indicate that alternative presentation formats do not influence users| processing of comprehensive income information. In other words, reporting comprehensive income in a separate statement or in the income statement does not add more relevant value than reporting it in the stockholders| equity section.

Keywords: comprehensive income; Statement of Financial Accounting Standards; SFAS; Financial Accounting Standards Board; FASB; International Accounting Standards Board; IASB; company valuation.

DOI: 10.1504/IJAF.2009.026625

International Journal of Accounting and Finance, 2009 Vol.1 No.3, pp.302 - 322

Published online: 21 Jun 2009 *

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