Question

Where and when shall accumulated other comprehensive income be displayed in the financial statements?

FASB ASC - - -

Note: Some examples of correctly formatted FASB ASC responses are 205-10-05-1, 323-740-S25-1, 260-10-60-1A, 260-10-55-99 and 115-60-35-128A

Answer 1

Other comprehensive income is the difference between net income as in the Income Statement (Profit or Loss Account) and comprehensive income, and represents the certain gains and losses of the enterprise not recognized in the P&L Account. It is commonly referred to as "OCI".

The following are the reasons for recycling the Other Comprehensive Income in the financial statements

(a) changes in the fair value of investments in equity instruments measured at fair value through

other comprehensive income

(i) a gain or loss on those investments should be recognised once only; therefore, recognising

a gain or loss in other comprehensive income and subsequently transferring it to profit or loss is inappropriate.

(ii) recycling of gains and losses to profit or loss would create something similar to the available-for-sale category in IAS 39 and would create the requirement to assess the equity instruments for impairment, which had created application problems. That would not significantly improve or reduce the complexity of financial reporting for financial assets.

(b) changes in the fair value of financial liabilities measured at fair value through profit or loss

attributed to the changes in the issuer’s own credit risk

(i) the overall objective of other comprehensive income is not clarified, including when an item should be presented in other comprehensive income and whether amounts in other comprehensive income should be reclassified to profit or loss (and if so, when).

(ii) this accounting is consistent with the requirement in IFRS 9 that prohibits recycling for investments in equity instruments that are measured at fair value with changes presented in other comprehensive income.

(c) remeasurements of the net defined benefit liability (asset)

(i) there is no consistent policy on the reclassification of other comprehensive income to profit or loss in IFRS, and it would have been premature to address this matter in the context of the amendments made to IAS 19 in 2011.

(ii) it is difficult to identify a suitable basis to determine the timing and amount of such reclassifications.

(d) revaluation surplus under revaluation model for property, plant and equipment and intangible assets In the Basis for Conclusions of IAS 16 and IAS 38, there is no explanation for the reasons for non-recycling of revaluation surplus under the revaluation model for property, plant and equipment and intangible assets.