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Statement of Financial Accounting Standards No. 130 - page 31 / 57





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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

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