Exposure Draft on Comprehensive Income

The FASB and the IASB issued exposure drafts on FASC 220 – Comprehensive Income. The exposure draft proposes to eliminate two options for presenting Comprehensive Income and require a Statement of Comprehensive Income (SOCI) to replace the current income statement. EPS will still be based on net income. The exposure draft calls for retrospective application of the changes.

The effective date for this change will be decided when the final statement is released. The final statement is expected in the 4th Quarter of 2010 and will probably be effective 1/1/2012.
1. Statement of Comprehensive Income (SOCI)
A SOCI is required each reporting period (annual and interim) with two sections that include the components of net income and the components of other comprehensive income (OCI). The presentation rules for the components of net income have not changed and will include continuing operations, discontinued operations and extraordinary items. The second part of the SOCI will include foreign currency translation adjustments, unrealized gains and losses on cash flow hedges, unrealized gains and losses on available for sale securities and those components of pension costs that are not recognized immediately as a component of net periodic benefit cost. 
Tax Effects
These components can be presented net of tax or gross of tax with one amount shown for the aggregate income tax expense or benefit. The amount of the tax expense or benefit for each component must be disclosed either on the face of the SOCI or in a footnote.
Reclassification Adjustments
The amount of unrealized gains or losses that are reclassified to earnings during the period is to be presented on the face of the SOCI.
Example of SOCI from exposure draft:


Statement of Income and Comprehensive

Income Year Ended December 31, 201X


Revenues                                                                                                  $140,000

Expenses                                                                                                     (25,000)

Other gains and losses                                                                                8,000

Gain on sale of securities                                                                           2,000

Income from operations before tax                                                        125,000

Income tax expense                                                                                  (31,250)

Income before extraordinary item                                                            93,750

Extraordinary item, net of tax                                                                   (30,500)

Net income                                                                                                   63,250


Other comprehensive income, net of tax:                                           

  Foreign currency translation adjustments                                              8,000

  Unrealized gains on securities:                                                            

     Unrealized holding gains arising during period          13,000  

     Less: reclassification adjustment for gains

     included in net income                                                    (1,500)          11,500

  Defined benefit pension plans:                                                           

     Prior Service Cost arising during period                       (1,600)      

     Net loss arising during period                                         (1,000)      

     Less: amortization of prior service cost

    included in net periodic pension cost                                  100         (2,500)

Other comprehensive income                                                                   17,000

Comprehensive income                                                                             80,250

A net approach for the components of comprehensive income with a gross presentation in the footnotes would no longer be allowed.
2. Accumulated Other Comprehensive Income (AOCI)
AOCI will continue to be presented on the balance sheet as a separate component of equity and the accumulated balances for each component will continue to be disclosed in either the Statement of Changes in Equity or the footnotes. However, since the detail behind the changes in OCI will be on the face of the SOCI, comprehensive income can be presented as a single total. 
For example:
Current Disclosure for AOCI                                             
Beginning Balance                                   $xxx 
Gains/Losses on AFS Securities    xxx                            
Pension Costs                              xxx                           
Other Comprehensive Income                     xxx
Ending Balance                                       $xxx
 New Disclosure for AOCI
Beginning Balance                            $xxx
Other Comprehensive Income               xxx
 Ending Balance                                $xxx       
As currently required the accumulated balances must be broken down by components to show the current period change. For example:

Unrealized Gain
On Securities
Defined Benefit
Pension Plan
Other Comprehensive
Beginning Balance
Current Period Change
Ending Balance
The amount of the Current Period Change should equal Other Comprehensive Income on the SOCI.
 Not a lot of change, except for the IT people who will need to rewrite the reports for the income statement.  Stay tuned for the final statement.

This blog

Linda is a CPA living in Southwestern Ohio, working as a research accountant for an investor-owned publicly traded utility company. She specializes in implementing new FASB and SEC requirements and FAS 133 derivative issues. In her role at the utility she has encountered many issues and written many memos, so send in your implementation and derivative issues and Linda will help figure out an answer.

More from this blog

Bloggers crew

Steve Knowles has spent 25 years in business and practice in the UK, but he also worked in the states and the years haven't dulled his way of seeing an alternative view to everyone else, and every day is a new adventure.


Joel M. Ungar, CPA is a lifelong resident of the Detroit area and a graduate of The University of Michigan. He is a principal with Silberstein Ungar, PLLC, a Top 15 auditor of SEC public reporting companies.


Allan Boress, CPA, with over 25 years as a practitioner and consultant to the accounting profession. Mr. Boress is the author of 12 published books in 6 different languages, including a best-seller, The "I-Hate-Selling" Book.


Larry Perry, CPA, CPA Firm Support Services, LLC, is the author of accounting and auditing manuals, author and presenter of live staff training seminars, and author of webcast and self-study CPE programs. He blogs about small audits, reviews, and compilations.

Sandra Wiley, COO and Shareholder, is ranked by Accounting Today as one of the 100 Most Influential People in Accounting as a result of her prominent role as an industry expert on HR and training as well as influence as a management and planning consultant. She is also a founding member of The CPA Consultant's Alliance. Sandra is a certified Kolbe™ trainer who advises firms on building balanced teams, managing employee conflict and hiring staff.

Maria Calabrese, CIR, Human Resources manager for Fazio, Mannuzza, Roche, Tankel, LaPilusa, LLC in Cranford, New Jersey, Maria's topics revolve around the world of: Mentoring, Performance management, and The "Y Generation," a.k.a. "The whY generation".


William Brighenti is a CPA, Certified QuickBooks ProAdvisor, and Certified [Business] Valuation Analyst, operating an accounting, tax, and QuickBooks consulting firm in Hartford, Connecticut, Accountants CPA Hartford.


Ken Garen, CPA, is the co-founder and President of Universal Business Computing Company (www.ubcc.com), a software development firm of high-volume, high-productivity accounting and payroll technology.


Eva Rosenberg, MBA, EA, is the publisher of TaxMama.com, and author of the weekly syndicated Ask TaxMama column. She provides answers to tax questions from taxpayers and tax professionals worldwide.


Amy Vetter, CPA, CITP is the CPA Programs Leader for Intacct Corporation responsible for leading the CPA/BPO Partners nationally.

Brian Strahle is the owner of LEVERAGE SALT, LLC where he provides state and local tax technical services to accounting firms, law firms and tax research organizations across the United States. He also writes a weekly column in Tax Analysts State tax Notes entitled, "The SALT Effect." For more info, visit his website: www.leveragestateandlocaltax.com
Scott H. Cytron, ABC, is president of Cytron and Company, known for helping companies and organizations improve their bottom line through a hybrid of strategic public relations, communications, marketing programs and top-notch client service. An accredited consultant, Scott works with companies, organizations and individuals in professional services (accounting, finance, medical, legal, engineering), high-tech and B2B/B2C product/service sales.

Rita Keller is a nationally known CPA firm management consultant, speaker, author, mentor and blogger. She has over 30 years hands-on experience in CPA firm management, marketing, technology and administrative operations.

Stacy Kildal is the mom of two fantastic kids, an Advanced Certified QuickBooks ProAdvisor, Certified Enterprise Solutions ProAdvisor, Sleeter Group Certified Consultant, a nationally recognized member of the Intuit Trainer and Writer Network, and co-host of RadioFree QuickBooks.
Michael Alter's blog specializes in providing practical advice to those who seek greater profitability and practice management tactics that enhance deeper client relationships.

Sally Glick, CMO, Principal, Marketer of the Year in 2003 and AAM Hall of Famer in 2007, leads a lively discussion of the constantly expanding roles of marketing and the professional marketers that drive this initiative in accounting firms of all sizes.


The IMA Young Professionals Blog features the insights of IMA’s Young Professionals Committee. Committee members share advice and experiences on careers, continuing education, work/life balance, and other issues affecting young accounting and finance professionals.


FEI Financial Reporting Blog provides highlights from SEC, PCAOB, FASB, IASB, and other regulatory news, including reporting under Sarbanes-Oxley Sect 404. It is written by Edith Orenstein, Director of Technical Policy Analysis at FEI.


Sue Anderson has 30 years of experience in continuing education for accountants. Currently she is the program director for online CPE provider CPE Link.


Jim Fahey is COO of Apple Growth Partners, a regional CPA firm in Ohio. His focus is on the effective and efficient use of technology within the firm by all team members.

Caleb Newquist is the Editor-in-Chief of Sift Media US, overseeing content for both AccountingWEB and Going Concern.

Leita Hart-Fanta, CPA, CGFM, and CGAP is the author of "The Yellow Book Interpreted" and owner of Yellowbook-CPE.com a website devoted to training for governmental auditors.


AccountingWEB is more than just a U.S. team of journalists and financial and technology experts - we have an international side, too! Members of our British team who publish AccountingWEB.co.uk share their ideas, insights, and perspectives from across the pond.