Project Update

Presentation of Comprehensive Income: Reclassifications Out of Accumulated Other Comprehensive Income

Last updated on February 5, 2013.

(Updated sections are indicated with an asterisk *)

The staff has prepared this summary of Board decisions for information purposes only. Those Board decisions are tentative and do not change current accounting. Official positions of the FASB are determined only after extensive due process and deliberations.

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 reconsider the presentation requirements for items reclassified out of accumulated comprehensive income. The Board amended the 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, among other changes to the presentation requirements related to comprehensive income.. In response to operational concerns of stakeholders the Board subsequently deferred those amendments that related to the presentation requirements of items reclassified out of accumulated other comprehensive income in Accounting Standards Update No. 2011-12, 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, until the Board considers alternative approaches for presenting reclassifications.

Due Process Documents 

On February 5, 2013 the FASB issued Accounting Standards Update No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income.

*Decisions Reached at Last Meeting

Please see Board Meeting minutes below.

*Summary of Decisions Reached to Date (As of February 5, 2013)

Please see Accounting Standards Update No. 2013-02. 

*Next Steps

None.

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 19, 2012 Board Meeting—Presentation
November 14, 2012 Board Meeting—Comment Letter Analysis and Redeliberations
June 20, 2012 Board Meeting—Project Scope and Objective
December 7, 2011 Board Meeting—Project Scope and Objective

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). 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 were effective for public entities for fiscal years and interim periods within those years beginning after December 15, 2011. For nonpublic entities, the amendments were 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 comments 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 statements 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 December 23, 2011 the Financial Accounting standards Board issued Accounting Standards Update No. 2011-012, 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. The Update deferred the specific requirement to present items that are reclassified from accumulated other comprehensive income to net income separately with their respective components of net income and other comprehensive income, allowing time for the Board to consider whether to make changes and/or clarifications to the presentation requirements for reclassification adjustments. Here is a link to the Accounting Standards Update 2011-12.

Contact Information

Patricia Donoghue
Project Manager
padonoghue@fasb.org

Bob Bhave
Project Manager
bbhave@fasb.org

Kathryn Cantlon
Postgraduate Technical Assistant
kscantlon@fasb.org