The Financial Accounting Standards Board has released a proposed Accounting Standards Update that is intended to improve the presentation for reclassifications out of accumulated other comprehensive income in a manner that balances the benefits to users of financial statements, without imposing significant costs to preparers of financial statements. The amendments would apply to all public and private organizations, except for nonprofits.

The board is asking for comments on the proposal by October 15.

Other comprehensive income includes gains and losses that are initially excluded from net income for an accounting period. Those gains and losses are later reclassified out of accumulated other comprehensive income into net income. The ASU would require a tabular disclosure about reclassifications out of accumulated other comprehensive income, thus gathering information about the amounts reclassified and a roadmap to related financial disclosures all in one place.

In a statement announcing the proposal, FASB noted that this information is currently presented throughout the financial statements, and so shouldn’t involve significant costs to preparers.

“Stakeholders raised concerns that certain requirements [from previous ASUs] about the reclassification of items out of accumulated other comprehensive income would be costly for preparers and add unnecessary complexity to financial statements,” said FASB Chairman Leslie Seidman. “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.”

The FASB has not yet decided on an effective date but plans to do so after seeking stakeholder comments.

The exposure draft and a “FASB In Focus” summary of the proposal are available on the FASB Web site.

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