FASB’s New Proposal on the Statement of Cash Flows–The Impact on Fortune 200 Companies

• In Event: Financial Accounting and Reporting 10

Abstract

The Financial Accounting Standards Board (FASB) prepared an exposure draft in 2015, which proposed major changes in the financial statements of not-for-profits. A major focus of this document was to update SFAS No. 117. Among other things, this proposal dealt with the Statement of Cash Flows. Along with requiring only the direct method of reporting cash flows from operating activities, the FASB proposal required a change in classification of certain items within this statement. Now, the FASB board members are considering extending the same changes to for-profit entities. Thus, the Update to SFAS No. 117 may be a prelude to a future FASB proposal to make changes in SFAS No. 95. Our research extended FASB’s proposed changes in classification to the Fortune 200 companies. Specifically, we examined the change in classification of purchases and sales of long-lived assets from investing to operating activities.

Author

• Roberta J Cable, Pace University