income, and (b) how other comprehensive income should be classified for
display in a financial statement.
Dividing comprehensive income into net income and other comprehensive
84. The Board decided that comprehensive income should be divided into two
broad display classifications, net income and other comprehensive income.
The Board reasoned that the division would generally preserve a familiar
touchstone for users of financial statements.
85. For similar reasons, the Board also decided not to change the remaining
display classifications of net income (that is, continuing operations,
discontinued operations, extraordinary items, and cumulative-effect
Display classifications for other comprehensive income
86. The Board looked to both the Concepts Statements and current practice
in considering how the components of other comprehensive income might be
classified for purposes of display. The Concepts Statements provide
general guidance about classification, with homogeneity of items being
identified as a key factor and the need to combine items that have
essentially similar characteristics (and the need to segregate those that
do not have similar characteristics) being emphasized.
87. In identifying current practice, the Board considered the results of an
FASB staff study of a sample of financial statements that revealed that
most enterprises classify balances of items of other comprehensive income
in the equity sections of their statements of financial position according
to the accounting standards to which those items relate. Because those
accounting standards result in items of comprehensive income that are quite
different from one another (for example, the items arising under Statement
52 on foreign currency are quite different from those arising under
Statement 87 on pensions), the staff's findings were that existing practice
is consistent with the guidance in the Concepts Statements.
88. Based on those considerations, the Board decided that the
classification of items of other comprehensive income should be based on
the nature of the items. The Board also concluded that the current
practice of classifying items according to existing standards generally is
appropriate at the present time. However, future standards may result