Project Update

Presentation of Comprehensive Income: Reclassifications of Items of Other Comprehensive Income

Last updated on January 6, 2012.

(Updated sections are indicated with an asterisk *)

Project Objective
*Due Process Documents
*Decisions Reached at Last Meeting
*Summary of Decisions Reached to Date
*Next Steps
Board/Other Public Meeting Dates
Background Information
Contact Information

Project Objective

The objective of this project is to consider the operational concerns of stakeholders about the amended presentation requirements for reclassification adjustments out of accumulated other comprehensive income in Accounting Standards Update No. 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income.

*Due Process Documents

On December 23, 2011, the Board completed this project with the issuance of Accounting Standards Update, Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05. This project was the first of two phases regarding presentation requirements for items reclassified out of accumulated other comprehensive income. The Board will reconsider those presentation requirements currently deferred by Update No. 2011-12 in phase two of this project, “Presentation of Reclassifications from Accumulated Other Comprehensive Income.” Please see Next Steps below for information regarding the second phase of this project. 

  • Download Accounting Standards Update 2011-12 
     
  • Read the FASB news release introducing the proposed Update
     
  • Read the Proposed Accounting Standards Update Comment Letters
     
  • Read the Proposed Accounting Standards Update Electronic Constituent Feedback (ECF) (ECF) (ECF)
     
  • Read the Comment Letter Summary.

*Decisions Reached at Last Meeting

Please see Board meeting minutes below .

*Summary of Decisions Reached to Date (As of December 23, 2011)

Please see Accounting Standards Update No. 2011-08.

*Next Steps

Please refer to the current technical plan for information about the second phase of this project, “Presentation of Reclassifications from Accumulated Other Comprehensive Income.”

Board/Other Public Meeting Dates

The Board meeting minutes are provided for the information and convenience of constituents who want to follow the Board’s deliberations. All of the conclusions reported are tentative and may be changed at future Board meetings. Decisions become final only after a formal written ballot to issue a final standard.

The following are links to the minutes for each meeting.

December 7, 2011 Board Meeting—Discussions about comments received on the November 8, 2011 proposed Accounting Standards Update on Comprehensive Income; decisions about effective date deferral of presentation requirements for reclassification adjustments in Update 2011-05 and issuance of a final Accounting Standards Update.
October 21, 2011 Board Meeting—Decisions about effective date deferral of presentation requirements for reclassification adjustments in Update 2011-05 and issuance of a proposed Accounting Standards Update
October 12, 2011 Education Session—Agenda decision announcement

Background Information

In June 2011, the FASB and the IASB issued separate amendments to their respective guidance on the presentation of comprehensive income that were convergent in many, but not all, respects; the FASB issued Accounting Standards Update No. 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income and the IASB issued Presentation of Items of Other Comprehensive Income (Amendments to IAS 1). The Boards agreed that items of other comprehensive income need to be more prominently presented and decided to permit the option to present the components of comprehensive income in one or two statements. Update 2011-05 removed the option to present other comprehensive income and its components in the statement of changes in stockholders’ equity. Additionally, Update 2011-05 required entities to present reclassification adjustments to show the effect of reclassifications on both the components of other comprehensive income and the components of net income in interim and annual financial statements. The amendments in Update 2011-05 are effective for public entities for fiscal years and interim periods within those years beginning after December 15, 2011. For nonpublic entities, the amendments are effective for fiscal years ending after December 15, 2012, and interim and annual periods thereafter.


Before the issuance of Update 2011-05, under U.S. GAAP, preparers had the option to present reclassification adjustments out of accumulated other comprehensive income either on the face of the financial statement in which comprehensive income is reported or in the notes to the financial statements. Also, before the Update’s issuance, U.S. GAAP did not require that the impact of reclassification adjustments on the components of net income be presented in the financial statements.

After the issuance of Update 2011-05, stakeholders raised concerns about the presentation requirements of reclassification adjustments out of accumulated other comprehensive income when they began the process of implementing the new provisions. Stakeholders noted difficulty in gathering the information necessary to present the impact of reclassification adjustments on the face of the statement where net income is presented, particularly for interim financial statements. Collection of this information may be especially difficult for reclassifications of OCI that are initially reported in a balance sheet account (such as certain pension-related costs capitalized as inventory) and subsequently reclassified to net income at a later date together with other items of net income. Stakeholders also expressed concern that the statement of net income may be overly cluttered if significant detail is required about reclassifications in the statement where net income is presented. Additionally, stakeholders noted that the guidance is not clear as to the level of detail required for interim financial statements. Here is a link to the unsolicited comment letters received from these stakeholders.

The Investors Technical Advisory Committee discussed the above issues as its meeting in October 2011 and confirmed that it would prefer to have reclassification adjustments, and their effect on net income, presented on the face of the statement of comprehensive income. Committee members noted that such a presentation would provide users with more straightforward and detailed information that could be analyzed more easily.

On October 12, 2011, the Chairman announced that a limited scope project would be added to the Board’s agenda to address stakeholder concerns and for the Board to consider whether to make changes and/or clarifications to the presentation requirements for reclassification adjustments.

Contact Information

Patricia Donoghue
Project Manager
padonoghue@fasb.org