The Financial Accounting Standards Board voted 4-3 on October 29 to finalize its proposal to eliminate the concept of "extraordinary items" from generally accepted accounting principles.
The guidance will be effective for annual periods and interim periods beginning after Dec. 15, 2015, for both public and private companies. Earlier adoption is permitted.
The board also reaffirmed its requirements that companies disclose qualitatively that they had a subsequent adjustment previously reported as an extraordinary item. Disclosure of quantitative impact would also be required, according to the discussions.
"If we're going to have optional transition, you need to have quantitative information as to what the build-up is," said FASB member Thomas Linsmeier. "Some of it's going to be retrospective, some of it's going to be prospective," he said.
The draft proposal to which FASB gave final approval was ASU No. 2014-220, Income StatementundefinedExtraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items, issued July 15. The board is expected to issue the standard in December.
