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Comprehensive income includes net income and OCI. OCI consists of revenues, expenses, gains, and losses to be included in comprehensive income but excluded from net income.
Reporting entities should present each of the components of other comprehensive income separately, based on their nature, in the statement of comprehensive income.
ASC 220-10-45-10A lists the components of OCI. These include:
  • Currency translation adjustments
  • Gains or losses on net investment hedges
  • Gains and losses on derivatives qualifying as cash flow hedges,
  • For fair value or cash flow hedges, the difference between the initial value of an "excluded component" of the hedging instrument and the current fair value of such component, to the extent not recognized in earnings,
  • Unrealized holding gains or losses on available for sale debt securities (this does not include accrued interest, writeoffs, or the allowance for credit losses).
  • Gains and losses associated with pensions or other postretirement benefits (to the extent not recognized as a component of net periodic pension cost),
  • Changes in the fair value of FVO-elected liabilities attributable to instrument-specific credit risk (aka – own credit adjustments).
ASC 220-10-45-10B lists items that are not considered OCI. These include:
  • Changes in equity resulting from investments by or distributions to owners
  • Items required to be reported as direct adjustments to additional paid-in capital (APIC), retained earnings, and certain other non-income equity accounts (e.g., reductions of stockholders’ equity related to employee stock ownership plans, recognition of tax benefits related to deductible temporary differences and carryforwards arising from a quasi-reorganization (as defined in ASC 852-20) , and net cash settlements of own share transactions).

4.3.1 Displaying the tax effects of OCI components

As discussed in ASC 220-10-45-11, each component of OCI should be reported either (1) net of related tax effects, or (2) before related tax effects with one amount shown for the aggregate income tax effect of all OCI items. A reporting entity should disclose the income tax effect of each component of OCI, including reclassification adjustments, either on the face of the statement in which those components are displayed or in the footnotes. ASC 220-10-55-7 through ASC 220-10-55-8B provides examples of the alternative formats for disclosing the tax effects of the components of OCI.

4.3.2 New guidance

In March 2017, the FASB issued ASU 2017-07, Compensation—Retirement Benefits (Topic 715), Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The new guidance changes how employers that sponsor defined benefit pension or other postretirement benefit plans present the net periodic benefit cost in the income statement. Additionally, significant pension cost or other postretirement benefit cost components reclassified out of AOCI are no longer required to be disclosed parenthetically provided they are presented separately on the income statement. See Figure FSP 4-8 for an example of such disclosure.
ASU 2017-07 was effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those years. For all other entities, the guidance is effective for fiscal years beginning after December 15, 2018 and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted as of the beginning of an annual reporting period for which financial statements have not been issued or made available for issuance. See FSP 13.3.
In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. ASU 2018-02 permits a company to reclassify disproportionate tax effects in AOCI caused by the Tax Cuts and Jobs Act of 2017 (the 2017 Act) to retained earnings. The FASB refers to these disproportionate tax effects as "stranded tax effects." Only the stranded tax effects resulting from the 2017 Act are eligible for reclassification. The reclassification amount should include the effect of the change in the US federal corporate income tax rate on the gross deferred tax amounts and related valuation allowances, if any, at the date of enactment of the law (December 22, 2017) related to items remaining in AOCI. In addition, reporting entities may choose to include in their reclassification other income tax effects related to the application of the 2017 Act on items remaining in AOCI.
ASU 2018-02 is effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted, including adoption in any interim period. Refer to FSP 16.2 for further discussion.
In February 2018, the FASB issued ASU 2018-03, Technical Corrections and Improvements to Financial Instruments—Overall (Subtopic 825-10), Recognition and Measurement of Financial Assets and Financial Liabilities. ASU 2018-03 introduced amendments to clarify certain aspects of the guidance issued in ASU 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. ASU 2018-03 clarifies that when the fair value option is elected for a financial liability, the guidance in ASC 825-10-45-5 should be applied, regardless of whether the fair value option was elected under either ASC 815-15, Derivatives and Hedging—Embedded Derivatives, or ASC 825-10, Financial Instruments—Overall. Under this guidance, entities present the portion of the total change in the fair value of the liability that results from a change in the instrument-specific credit risk separately in other comprehensive income.
In addition, ASU 2018-03 clarifies that for foreign currency-denominated financial liabilities for which the entity has elected the fair value option, the amount of the change in fair value that relates to instrument-specific credit risk first should be measured in the currency of denomination when presented separately from the total change in fair value of the financial liability. Both components of the change in fair value of the liability should then be remeasured into the functional currency of the reporting entity using end-of-period spot rates. The remeasurement of the change in fair value of the instrument-specific credit risk should be presented in accumulated other comprehensive income.
ASU 2018-03 was effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years beginning after June 15, 2018. For all other entities, the guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019 (the same as the effective date for ASU 2016-01). Early adoption is permitted as long as ASU 2016-01 has also been adopted.
ASU 2018-09  In July 2018, the FASB issued ASU 2018-09, Codification Improvements. ASU 2018-09 clarifies the guidance in ASC 220-10-45-10B by removing the generic phrase “taxes not payable in cash” and adding guidance that is specific to certain quasi-reorganizations. This was done to clarify that while the guidance no longer applies to bankruptcy organizations, it is applicable to quasi-organizations.
The amendment introduced by ASU 2018-09 was effective for public business entities for annual periods beginning after December 15, 2018, and interim periods within those years. For all other entities, the guidance is effective for annual period beginning after December 15, 2019 and interim periods within annual periods beginning after December 15, 2020.
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