Current U.S. generally accepted accounting principles allow reporting entities several alternatives for displaying other comprehensive income and its components in financial statements. The Financial Accounting Standards Board (FASB) has issued a proposed Accounting Standards Update (ASU), Comprehensive Income (Topic 220) - Statement of Comprehensive Income, which, if finalized, would remove existing options that permit the components of net income and the components of other comprehensive income to be displayed in separate financial statements. The proposed ASU would require that all components of comprehensive income be reported in a continuous financial statement that displays the components of net income and the components of other comprehensive income within comprehensive income. An entity would be required to display a total for each part — net income and other comprehensive income. An entity that has no items of other comprehensive income in any period presented would not be required to report other comprehensive income or comprehensive income.
The amendments in the proposed ASU would not change:
- The items that must be reported in other comprehensive income
- When an item of other comprehensive income must be reclassified to net income
- The option for an entity to show components of other comprehensive income gross or net of the effect of income taxes in the statement of comprehensive income as long as the tax effect for each component is disclosed in the notes to the financial statements or is displayed parenthetically on the statement of comprehensive income
- How earnings per share are calculated or reported
The amendments in the proposed ASU would be applied on a fully retrospective basis. Early adoption would be permitted. The FASB plans to align the proposed effective date of the amendments in this proposed ASU with the effective date of the amendments in the recently proposed ASU on financial instruments. See “Pervasive Changes to the Accounting for Financial Instruments Proposed” above.
The proposed ASU, Comprehensive Income (Topic 220) - Statement of Comprehensive Income, is available for comment until September 30, 2010 at www.fasb.org. Also, since this proposed ASU is a joint project undertaken with the International Accounting Standards Board (IASB), the IASB has separately issued a similar document. See “IASB Proposes Continuous Statement of Profit or Loss and Other Comprehensive Income” in the International section below.
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