<nobr>Jun 4, 2010</nobr>

FASB Seeks Comments on Proposed Update on Statement of Comprehensive Income

The Financial Accounting Standards Board on May 26 issued a proposed Accounting Standards Update, Statement of Comprehensive Income, that would require an entity to display total comprehensive income and its components in a continuous statement of comprehensive income.

Investment companies, defined benefit pension plans, and other employee benefit plans, along with entities that provide a full set of financial statements that report financial position, results of operations, and cash flows would be affected by the proposal.

FASB is seeking comments on the proposed changes to the requirements for reporting comprehensive income by September 30, 2010. The IASB is separately issuing a similar document.

The proposed amendments would require that all components of comprehensive income be reported in a continuous financial statement that displays the components of net income and the components of other comprehensive income (OCI) within comprehensive income. Current U.S. generally accepted accounting principles and International Financial Reporting Standards (IFRS) allow reporting entities several alternatives for displaying other comprehensive income and its components in financial statements.

Under the amendments, an entity would be required to report total comprehensive income and its components in two parts -- net income and other comprehensive income -- in a continuous statement of financial performance. An entity would be required to display a total for each part; it also would be required to display each component of net income and each component of other comprehensive income in that statement of financial performance.

According to Mercer, the drafts would not alter the classification of items between net income and OCI, such as pension plan actuarial gains and losses, or change the computation of earnings per share, but the net income figure would no longer be the bottom line of the statement.

Questions or comments on this issue should be addressed to Kathryn Ricard (kricard@eric.org).

Websites:

FASB Project Update

FASB Exposure Draft

IASB Press Release

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