FASB issued a series of tentative board decisions related to its project on the disaggregation of income statement expenses. The summary of tentative decisions includes an example of an income statement featuring the proposed new detail for disclosures.
FASB decided to require that entities disclose costs incurred that are expensed as incurred and costs incurred that are capitalized as inventory. Both sets of disaggregated disclosures would be required to include details related to employee compensation; depreciation of property, plant, and equipment; and amortization of intangible assets. Both would include inventory-related disclosures.
FASB also tentatively decided to require the disaggregation of residual expenses and costs incurred, as well as selling expenses.
At last month's AICPA & CIMA Conference on Current SEC and PCAOB Developments, FASB officials categorized the project as an important one on its agenda and said an exposure draft could be published by July.
"When we did our outreach with investors, time and again what we heard was that as they look at the income statement, they just weren't seeing the level of detail they needed to really understand those operations," FASB Chair Richard R. Jones said at the conference. "So as we progress on this project, I would ask you to think about it in that lens: If you were trying to understand one of these companies, is the information that's on the face of the income statement sufficient, or would you look at additional detail to understand the change from period to period?"
— To comment on this article or to suggest an idea for another article, contact Bryan Strickland at Bryan.Strickland@aicpa-cima.com.