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FASB proposes concepts for financial statement presentation

By Ken Tysiac

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FASB issued a proposal Thursday that would establish a set of concepts for how recognized items should be presented in a financial statement.

The exposure draft issued by FASB is designed for provide a foundation for the board as it creates future accounting standards, with a goal of enhancing financial statement users’ ability to assess prospects for future cash flows by addressing how to:

  • Group individual recognized items into line items and subtotals.
  • Clarify the relationships among assets, liabilities, and equity, and the effects of related changes of those assets and liabilities on comprehensive income and cash flows.

The proposal, Concepts Statement 8—Conceptual Framework for Financial Reporting: Chapter 7: Presentation, is part of FASB’s larger project to create a new conceptual framework, which also would address concepts related to measurement and disclosure.

“The conceptual framework is the foundation for resolving accounting and reporting questions,” FASB Chairman Russell Golden said in a news release. “These proposals are intended to provide direction, structure, and a basis for consistent board conclusions when making standard-setting decisions related to presentation.”

Comments can be made through Nov. 9 at FASB’s website.

—Ken Tysiac (ktysiac@aicpa.org) is a JofA editorial director.