FASB Issues Accounting Standards UpdateThe Financial Accounting Standards Board (FASB) has issued ASU 2015-01, "Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items", which is intended to "identify, evaluate, and improve areas of [U.S.] GAAP for which cost and complexity can be reduced while maintaining or improving the usefulness of the information provided to users of financial statements." Eliminating extraordinary items from the Income Statement will allow the entity the option to forgo from having to determine if the particular event is both unusual in nature and infrequent in occurrence (criteria for determining the disclosure of an extraordinary item).
Eliminating the concept of extraordinary items will save time and reduce costs for preparers because they will not have to assess whether a particular event or transaction event is extraordinary (even if they ultimately would conclude it is not). This also alleviates uncertainty for preparers, auditors, and regulators because auditors and regulators no longer will need to evaluate whether a preparer treated an unusual and/or infrequent item appropriately.
This update is effective for annual periods beginning after December 15, 2015 and interim periods within those annual periods. Click here to access the full ASU 2015-01.
Article by: Michael Edwards, Tax Manager