The US Financial Accounting Standards Board (FASB) has issued a proposal to improve the presentation of reclassifications out of accumulated other comprehensive income.
The proposed Accounting Standards Update (ASU) is intended to be structured in a way that will not add cost to the preparation of financial statements. It would be applicable to all public and private organisations, but not to not-for-profit entities.
The FASB’s proposals would require a tabular disclosure about reclassifications out of accumulated other comprehensive income; reclassifications of net gains and losses that are initially excluded from net income for an accounting period before later being reintroduced.
This new disclosure would present all reclassified amounts in one place rather than having them spread throughout financial statements. As this information is already presented anyway under US GAAP, the FASB thinks there should be no significant costs incurred.
In December 2011, the FASB issued ASU No. 2011-12, which deferred changes required by ASU No. 2011-05 related to reclassifications, to allow the FASB to perform a cost/benefit analysis of the requirements. The latest proposed update is an attempt to provide alternative presentation requirements for reclassifications out of accumulated other comprehensive income.
“Stakeholders raised concerns that certain requirements about the reclassification of items out of accumulated other comprehensive income would be costly for preparers and add unnecessary complexity to financial statements,” FASB chairman Leslie Seidman said.
“Based on this new feedback, the Board is proposing a revised approach that will present information about other comprehensive information in a useful way that is more cost-effective.”
Deadline for comment on the proposals is 15 October.