Wiley GAAP: Financial Statement Disclosure Manual - Joanne M. Flood

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end of the reporting period, that reporting period's total of other comprehensive income is transferred to a component of equity. It is presented separately from retained earnings and additional paid‐in capital on the balance sheet. (ASC 220‐10‐45‐14) On the face of the financial statements, or as a note, the entity must present:

       The changes in the accumulated balances of each component of other comprehensive income, and

       Current period reclassifications out of accumulated other comprehensive income and other amounts of other comprehensive income, either before‐tax or net‐of‐tax.(ASC 220‐10‐45‐14A and 50‐5)

      Amounts accumulated in other comprehensive income from cash flow hedges are reclassified into earnings in the same period(s) in which the hedged forecasted transactions (such as a forecasted sale) affect earnings. If it becomes probable that the forecasted transaction will not occur, the net gain or loss in accumulated other comprehensive income must be immediately reclassified. (ASC 815‐30‐35‐38)

      Reclassification adjustments required by other Topics can be presented by component of other comprehensive income, either:

       In a single note, or

       Parenthetically on the face of their annual financial statement.(ASC 220‐10‐45‐17 and 50‐6 describes the information requirements for disclosure in the notes)

      If an entity chooses to present information for items reclassified out of AOCI on the face of the statement, the entity should present parenthetically:

       The effect of significant amounts reclassified from each component of AOCI based on its source, and

       The aggregate tax effect of those significant reclassifications on the line item for income tax expense or benefit.(ASC 220‐10‐45‐17A)

      If an entity uses a separate line item in the income statement to present pension or other postretirement benefit cost components reclassified out of AOCI, the entity is not required to present those items parenthetically. (ASC 220‐10‐45‐17A)

      If an entity chooses or is required to place the information reclassified out of AOCI in the notes, it should provide:

       The significant amounts by each component of AOCI,

       A subtotal of each component of AOCI, and

       For those amounts required by other Topics to be reclassified to net income in their entirety in the same reporting period, the line items affected by the reclassification.

      If a component is only partially reclassified to net income, entities must cross‐reference to the related footnote for additional information. (ASC 220‐10‐50‐6)

      Items that are unusual or infrequent should be reported as a separate component of income from continuing operations or in the notes. The EPS effect of these items should not be reported on the face of the income statement. (ASC 220‐20‐45‐1 and 50‐1)

      In addition, the entity should disclose the nature and financial effects of each event or transaction on the face of the income statement as a separate component of continuing operations, or alternatively, in notes to financial statements. (ASC 220‐20‐50‐3 and 45‐16)

      In general, proceeds from insurance claims are classified based on the nature of the loss and requires judgment. As long as it does not conflict with other guidance, entities should classify recoveries from business interruption insurance in the statement of operations. (ASC 220‐30‐45‐1) In the notes to the financial statements, the entity should include:

       The nature of the event causing business interruption losses.

       Aggregate amount of interruption insurance recoveries and the line item where classified.(ASC 230‐30‐50‐1)

      The proceeds related to lost assets should not be recorded as reductions of the costs to rebuild or replace the insured asset.

      Example 5.1: Basic Order of Income Statement and Comprehensive Income Statement

Statement of Income
Income from continuing operations Sales or service revenues Costs of goods sold Operating expenses Remaining excess of fair value over cost of acquired net assets in a business combination Gains and losses Other revenues and expenses Items that are unusual or infrequent, gross Income tax expense related to continuing operations
Results from discontinued operations Income (loss) from operations of a discontinued component Gain (loss) from disposal of a discontinued component
Net income
Earnings per share information
Other comprehensive income Foreign currency translation adjustments Unrealized gains (losses) on securities Adjustments related to pension liabilities or assets Gains/losses on cash‐flow hedging items Gains/losses on hedges of forecasted foreign‐currency‐denominated transactions Reclassification adjustment (may be shown gross or net of tax, details may be disclosed in note) Income tax related to other comprehensive income (if components are not shown net of tax)
Comprehensive income
Earnings per share information

Sales:

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