FASB Requires Changes to Comprehensive Income Reporting

By Jeff Skaggs, Audit Principal
February 2012

The Financial Accounting Standards Board (FASB) has issued two Accounting Standards Updates (ASU) which effect the reporting of comprehensive income.

ASU No. 2011-05 was issued to increase the prominence of items reported in other comprehensive income (OCI) as well as to facilitate the convergence of U.S. generally accepted accounting principles and International Financial Reporting Standards.

ASU No. 2011-12 was subsequently issued to defer certain reclassification adjustment requirements contained in ASU No. 2011-05 while the FASB reconsiders those provisions.

The primary change, pending resolution of reclassification adjustment reporting, eliminates the option to present OCI and its components in the statement of changes in stockholders’ equity. OCI and its components are now required to be presented in a single continuous statement of comprehensive income or in two separate but consecutive statements. In the two-statement approach, the first statement should present total net income and its components followed consecutively by a second statement that should present OCI, its components and total OCI.

For nonpublic entities, these changes are effective for fiscal years ending after December 15, 2012 (i.e. December 31, 2012) and need to be applied retrospectively.

The issue being reconsidered in ASU No. 2011-12 relates to the provisions contained in ASU No. 2011-05 requiring entities to present reclassification adjustments and the effect of those reclassification adjustments on the face of the financial statements where net income is presented, by component of net income, and on the face of the financial statements where OCI is presented, by component, for all periods presented. We will keep you updated as the FASB’s deliberations progress.

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