FASB Update: Income Statement—Extraordinary and Unusual Items

As part of an initiative to simplify accounting standards, The Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2015-01: Income Statement—Extraordinary and Unusual Items to eliminate the concept of extraordinary items from generally accepted accounting principles (GAAP).

Events or transactions are currently defined as extraordinary if they are unusual in nature and occur infrequently. If an item meets these criteria, it is required to be segregated and presented, net of tax, separately from income from continuing operations in the income statement.  

Eliminating extraordinary items from GAAP is meant to save time and reduce costs for preparers, as well as clear uncertainty related to evaluating appropriate classification of extraordinary items. 

The amendments will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, for both public and private entities. Early adoption is allowed but must be applied from the beginning of the fiscal year of adoption. 

The new Accounting Standards Update No. 2015-01 is available at www.fasb.org.