Reference no: EM131790173

Problem

In April 2004, FASB and the International Accounting Standards Board (IASB) created a joint project on financial statement presentation. The proposed financial statements are supposed to help predict cash flows for equity valuation. To be clear, these financial statements shift focus from net income to total comprehensive income, as all other comprehensive income items are now presented on the face of the statement. Missing from this discussion, however, are the concerns of smaller business entities, both public and nonpublic, that do not use international capital markets. It is unclear whether the reclassification of relevant line items (like current assets and current liabilities) to the footnotes will create additional costs to entities that provide capital to small businesses. Do you believe the new guidelines will help equity investors and other financial statement users better understand a business's past and present financial position and assess potential future cash flow?