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Chapter 2 — Financial Statement Accounting and Disclosure Topics

2.9 Financial Statement Classification, Including Other Comprehensive Income

2.9 Financial Statement Classification, Including Other Comprehensive Income

The SEC staff frequently comments on registrants’ classification of items in the financial statements — namely, on whether their balance sheets, income statements, statements of cash flows, and statements of comprehensive income comply with the requirements of Regulation S-X and U.S. GAAP.

Footnotes

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While it is rare for an entity to classify equity in earnings of an equity method investee as a component of operating income, the SEC staff may not object to such classification if the equity method investee’s operations are “integral” to the investor’s business. In this context, the staff’s definition of “integral” indicates more than that the investor and investee operate in the same line of business (see the highlights of the March 2003 AICPA SEC Regulations Committee joint meeting with the SEC staff).