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FASB Defers Income Reclassification Reporting Requirements

by Mike Godfrey, Tax-News.com, Washington

28 December 2011


The United States accounting standards setter, the Financial Accounting Standards Board has announced an update that will defer the specific requirements on the separate presentation of items which have been reclassified from accumulated other comprehensive income to net income. A previous update proposed to make mandatory the separate reporting of the respective components of net income and comprehensive income in relation to these items.

Earlier this year, the FASB issued Accounting Standards Update No. 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income.

The update was intended to increase the prominence of other comprehensive income in financial statements and help financial statement users better understand the cause of a company’s change in financial position and results of operations. Stakeholders, however, recently raised concerns that the new presentation requirements about the reclassification of items out of accumulated other comprehensive income would be costly for preparers and add unnecessary complexity to financial statements.

As a result of these concerns, the Board said it had decided to reconsider whether it is necessary to require companies to present reclassification adjustments by component in both the statement where net income is presented and the statement where other comprehensive income is presented for both interim and annual financial statements. The Board did not defer the requirement to report comprehensive income either in a single continuous statement or in two separate but consecutive financial statements.

The amendments are effective at the same time as the amendments in Update 2011-05. Therefore, the amendments in the update are effective for public entities for fiscal years, and interim periods within those years, beginning after December 15, 2011. For non-public companies and not-for-profit organizations, the amendments in the update are effective for fiscal years ending after December 15, 2012, and interim and annual periods thereafter.

TAGS: tax | business | law | accounting | United States | Financial Accounting Standards Board (FASB) | standards

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