The FASB (the "board") met on November 14, 2012 to discuss the feedback received on the exposure draft on the new disclosures on items reclassified from accumulated other comprehensive income. The board decided to move towards a final standard after making decisions on presentation, interim disclosures, and the effective date. This In brief article provides an overview of those decisions and what's next.
The FASB (the “board”) met on November 14, 2012 to discuss the feedback received on the exposure draft1 on the new disclosures on items reclassified from accumulated other comprehensive income. The board decided to move towards a final standard after making decisions on presentation, interim disclosures, and the effective date.
The exposure draft required companies to disclose, in a single footnote, a table showing the amount reclassified from each component of accumulated other comprehensive income based on its source (e.g., the release due to cash flow hedges from interest rate contracts) and the income statement line items affected by the reclassification (e.g., interest income or interest expense). The income statement line item affected would only need to be shown for components required to be reclassified to net income in their entirety. If a component is not required to be reclassified to net income in its entirety (e.g., the net periodic pension cost), companies would instead cross reference to the related footnote for additional information (e.g., the pension footnote).
The board decided to give companies the flexibility to present the information either in the notes or parenthetically on the face of the financial statements provided that all of the required information is presented in a single location. Thus, the prescriptive table proposed in the exposure will not be a requirement.
The board decided public companies will be required to comply with this requirement for interim periods. The board also decided that non-public companies will not be required to comply with this requirement for interim periods.
The FASB decided to make the final standard effective for public companies for reporting periods beginning after December 15, 2012, with non-public companies adopting the standard one year later.
All public and non-public companies that report items of other comprehensive income could be affected. Not-for-profit organizations are exempt from the new requirements.
The board requested that the FASB staff draft a final Accounting Standards Update incorporating the decisions reached at the November 14 board meeting.
PwC clients who have questions about this In brief should contact their engagement partner. Engagement teams that have questions should contact the Financial Instruments team in the National Professional Services Group (1-973-236-7803).
In Brief is designed to provide a timely, high-level overview of significant financial reporting developments. It is issued by the National Professional Services Group of PricewaterhouseCoopers LLP. This publication has been prepared for general information on matters of interest only, and does not constitute professional advice on facts and circumstances specific to any person or entity. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication. The information contained in this material was not intended or written to be used, and cannot be used, for purposes of avoiding penalties or sanctions imposed by any government or other regulatory body. PricewaterhouseCoopers LLP, its members, employees and agents shall not be responsible for any loss sustained by any person or entity who relies on this publication.