NEWS RELEASE 06/16/11
FASB Issues Accounting Standards Update to Improve Presentation of
Comprehensive Income
Norwalk, CT, June 16, 2011—The
Financial Accounting Standards Board (FASB) today issued Accounting Standards
Update (ASU) No. 2011-05 Comprehensive Income (Topic 220): Presentation of
Comprehensive Income. The Update is intended to increase the prominence of
other comprehensive income in financial statements.
In US GAAP, the ASU
will supersede some of the guidance in Topic 220 of the accounting
Codification.
The main provisions of this Update provide that an entity
that reports items of other comprehensive income has the option to present
comprehensive income in either one or two consecutive financial
statements:
- A single statement must present the components of net income and total net
income, the components of other comprehensive income and total other
comprehensive income, and a total for comprehensive income.
- In a two-statement approach, an entity must present the components of net
income and total net income in the first statement. That statement must be
immediately followed by a financial statement that presents the components of
other comprehensive income, a total for other comprehensive income, and a
total for comprehensive income.
The option in current GAAP that
permits the presentation of other comprehensive income in the statement of
changes in equity has been eliminated.
Leslie F. Seidman, chairman of
the FASB, said: “We heard from investors there was a need to present other
comprehensive income information more prominently in financial statements. This
Update, which was developed jointly with the International Accounting Standards
Board, responds to those investor needs, and will bring greater consistency and
prominence to the reporting of other comprehensive income around the world.”
The amendments in this Update should be applied retrospectively. For
public entities, the amendments are effective 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. Early adoption is
permitted, because compliance with the amendments is already permitted.
The Update, a “FASB In Focus” (a high-level summary of the proposal),
and a podcast discussing the Update is available at www.fasb.org.
About
the Financial Accounting Standards Board
Since 1973, the
Financial Accounting Standards Board has been the designated organization in the
private sector for establishing standards of financial accounting and reporting.
Those standards govern the preparation of financial reports and are officially
recognized as authoritative by the Securities and Exchange Commission and the
American Institute of Certified Public Accountants. Such standards are essential
to the efficient functioning of the economy because investors, creditors,
auditors, and others rely on credible, transparent, and comparable financial
information. For more information about the FASB, visit our website at www.fasb.org.