Financial Statement Presentation

Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses

Summary - This ASU is effective for public business entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted.

A public business entity should apply ASU No. 2024-03 prospectively to financial statements issued for reporting periods beginning after the effective date of ASU No. 2024-03. The disclosures required ASU No. 2024-03 do not need to be included in financial statements for reporting periods beginning before the effective date that are being presented for comparative purposes with financial statements issued for periods after the effective date.

A public business entity may elect to apply ASU No. 2024-03 retrospectively to any or all prior periods presented in the financial statements. If applied to financial statements for periods beginning before the effective date, those disclosures should be prepared and presented in accordance with this Subtopic.

This ASU requires public companies to disclose, in the notes to financial statements, specified information about certain costs and expenses at each interim and annual reporting period. Specifically, they will be required to:

• Disclose the amounts of (a) purchases of inventory; (b) employee compensation; (c) depreciation; (d) intangible asset amortization; and (e) depreciation, depletion, and amortization recognized as part of oil- and gas-producing activities (or other amounts of depletion expense) included in each relevant expense caption.
• Include certain amounts that are already required to be disclosed under current generally accepted accounting principles (GAAP) in the same disclosure as the other disaggregation requirements.
• Disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively.
• Disclose the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses.

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© 2026 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Exposure Draft - Proposed Accounting Standards Update 2021-001 —Interim Reporting (Topic 270): Disclosure Framework —Changes to Interim Disclosure Requirements

Summary - The FASB issued a proposed Accounting Standards Update (ASU) that would modify the disclosure requirements for interim financial reporting. Stakeholders are encouraged to review and provide comment on the proposal by January 31, 2022.

The proposed ASU is part of the FASB’s disclosure framework project to improve the effectiveness of disclosures in the notes to financial statements. It would update FASB Accounting Standards Codification® Topic 270, Interim Reporting, which clarifies the application of accounting principles and reporting practices for entities preparing interim financial statements and notes in accordance with Generally Accepted Accounting Principles (GAAP). The amendments to Topic 270 would apply to all entities that provide interim financial statements and notes in accordance with GAAP.

Broadly, the proposed ASU would:
1) Incorporate a requirement that was previously included in SEC Regulation S-X that requires disclosure at interim periods when a significant event or transaction has occurred since the prior year-end that has a material effect on an entity.

The U.S. Securities and Exchange Commission (SEC) removed language from Regulation S-X, Rule 10-01, Interim Financial Statements, with the 2018 issuance of SEC Release No. 33-10532, Disclosure Update and Simplification. The amendments in this proposed ASU would add a new principle, based on the removed portion of Regulation S-X, which would be applicable to all entities that provide interim financial statements and notes in accordance with GAAP.

The proposed ASU also states that the resulting disclosures may be transaction or event specific.
2) Clarify the presentation and disclosure alternatives for interim financial statements and notes in accordance with GAAP.

The proposed ASU would clarify that the following three forms of financial statements and notes are in accordance with GAAP:
Financial statements prepared with the same level of detail as the previous annual statements subject to all the presentation and disclosure requirements in GAAP;
Financial statements prepared with the same level of detail as the previous annual statements subject to all the presentation requirements in GAAP and limited notes subject to the disclosure requirements in Topic 270; and
Condensed financial statements and limited notes subject to the disclosure requirements in Topic 270.

3) Address feedback from stakeholders who requested that interim reporting requirements be clarified and consolidated into one Topic of the Codification.

Certain amendments in the proposed ASU would respond to stakeholders’ desire for interim reporting requirements to be clarified and consolidated into one Topic of the Codification.

Finally, the proposed ASU includes amendments to clarify when comparative disclosures are required.
 
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© 2021 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.