FASB Defers Part of Comprehensive Income Standards Update


FASB on Friday released an update that defers a portion of new accounting requirements for comprehensive income issued earlier this year.

The update defers the 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.

FASB issued Accounting Standards Update (ASU) 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.

The original standard, ASU no. 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income, was intended to make other comprehensive income more prominent in financial statements and to facilitate convergence of U.S. GAAP and IFRS. The standard, issued in June, supersedes some of the guidance in Accounting Standards Codification Topic 220, Comprehensive Income.

The standard gives entities the option of reporting items of other comprehensive income in either one or two consecutive financial statements. In a single statement, the entity 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.

Should the entity choose a two-statement approach, the components of net income and total net income must be presented in the first statement. A second statement must immediately follow presenting the components of other comprehensive income, a total for other comprehensive income, and a total for comprehensive income.

FASB said stakeholders raised concerns about the cost and complexity of reclassifying items out of accumulated other comprehensive income in the new standard. FASB decided to reconsider whether it’s necessary to require companies to present reclassification adjustments by components in both interim and annual financial statements for both:

  • The statement where net income is presented.
  • The statement where other comprehensive income is presented.


The deferral supersedes only the paragraphs pertaining to how and where reclassification adjustments are presented. While FASB reconsiders that guidance, entities will continue to report reclassifications out of accumulated comprehensive income consistent with the presentation requirements in effect before ASU 2011-05, according to a FASB news release.

For public entities, the amendments take effect for fiscal years and interim periods within those years beginning after Dec. 15, 2011. The amendments take effect for nonpublic companies and nonprofits for fiscal years ending after Dec. 15, 2012, and interim and annual periods afterward.

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