PwC is pleased to offer our Financial statement presentation guide. This guide serves as a compendium of many of today’s presentation and disclosure requirements included in US GAAP, including relevant references to and excerpts from the FASB’s Accounting Standards Codification (the Codification). It also provides our insights and perspectives, interpretative and application guidance, illustrative examples, and discussion on emerging practice issues.
This guide also discusses the requirements in S-X, Article 5
, for commercial and industrial companies. In most cases, the content does not include the requirements of other Articles of Regulation S-X or other industry-specific guidance. However, some chapters address topics relevant to reporting entities in other industries, such as investments and derivatives.
Appropriate financial statement presentation and disclosure is key to achieving the objectives of financial reporting, including providing decision-useful information to investors, lenders, creditors, and other stakeholders. This guide has been prepared to support practitioners in the preparation of their financial statements. It should be used in combination with a thorough analysis of the relevant facts and circumstances, review of the authoritative accounting literature, and appropriate professional and technical advice.
The guidance in this guide is applicable to reporting entities that are going concerns and addresses financial statement presentation and disclosure related to the core financial statements. As a result, the following areas are not addressed in this guide:
- Management Discussion and Analysis (MD&A)
- Regulation S-K reporting
PwC’s Bankruptcies and liquidations
guide addresses the presentation and disclosure requirements applicable to entities reporting on a liquidation basis.
References to US GAAP
Definitions, full paragraphs, and excerpts from the FASB’s Accounting Standards Codification are clearly labeled. In some instances, guidance was cited with minor editorial modification to flow in the context of the PwC Guide. The remaining text is PwC’s original content.
References to other PwC guidance
This guide provides general and specific references to chapters in other PwC guides to assist users in finding other relevant information. References to other guides are indicated by the applicable guide abbreviation followed by the specific section number. The other PwC guides referred to in this guide, including their abbreviations, are:
Summary of significant changes
The following is a summary of recent noteworthy revisions to the guide. Additional updates may be made to future versions to keep pace with significant developments.
Revisions made in April 2022
- FSP 11.2 was updated to remove reference to FASB Concepts Statement No. 6, which has been superseded by FASB Concepts Statement No. 8.
- FSP 11.4.7 was added to include discussion of considerations for distinguishing legal or contractual liabilities from contingent liabilities.
- FSP 17.4.2 was updated to enhance the discussion related to consideration transferred in a business combination.
- FSP 188.8.131.52A was removed. The guidance for pro forma disclosure requirements applicable to acquisitions and dispositions of businesses formerly contained in Regulation S-X Article 11 was superseded (the new guidance is described in FSP 184.108.40.206).
- FSP 17.4.17 was updated to enhance the discussion related to circumstances in which the initial accounting for a business combination is incomplete.
- FSP 220.127.116.11 was updated to include guidance on disclosing the effects of a measurement period adjustment on supplemental pro forma information.
Revisions made in February 2022
- FSP 30.4 was updated to discuss a change in financial statement presentation.
- Question FSP 30-1 in FSP 30.4.1 was clarified to note that a change to conform to public company accounting requirements from the private company council alternatives is not a change in accounting principle.
- Figure FSP 30-1 in FSP 30.7 was updated to provide additional guidance on materiality considerations and the error evaluation framework.
Revisions made in December 2021
- FSP 17.4.7 was added to discuss the disclosure requirements of ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, for elected practical expedients.
- Example FSP 17-1 in FSP 17.4.16 was updated to enhance the discussion related to ASC 805 supplemental pro forma financial statement requirements.
Revisions made in November 2021
- Former Figure FSP 2-2 was removed.
- FSP 2.2 was updated to clarify Regulation S-X guidance for balance sheet presentation, including when reporting entities, such as brokers and dealers, are subject to other SEC regulations.
- Figure FSP 2-1 in FSP 2.2.1 was updated to enhance the example balance sheet presentation for leases when following ASC 840 or ASC 842.
- FSP 2.3 was updated to clarify the guidance on the order of presenting balance sheet line items.
- FSP 2.4 was updated to enhance the discussion related to the right of setoff for balance sheet presentation.
- The order of certain sections within FSP 3 was rearranged, while certain sections were also combined.
- FSP 3.2 was updated to highlight the issuance of ASU 2021-10, Government Assistance (Topic 832).
- FSP 3.6.1 was updated to enhance the discussion related to the income statement presentation of advertising expense.
- FSP 18.104.22.168 was added to provide guidance on the income statement presentation of favorable and unfavorable contract amortization.
- FSP 3.6.15 was added to discuss the presentation and disclosure requirements in ASC 705, Cost of Sales and Services, related to consideration received from a vendor.
- FSP 3.6.16 was updated to enhance the discussion around the presentation of unusual and infrequently occurring items.
- FSP 3.10 was updated to provide additional guidance on accounting for government assistance.
- FSP 3.10.3 was added to reflect the issuance of ASU 2021-10, Government Assistance (Topic 832), related to the disclosure requirements of government assistance.
FSP 7, Earnings per share
- FSP 22.214.171.124 was updated to reflect a change to the calculation of the adjustment to the numerator of basic EPS upon the redemption of preferred stock due to the elimination of the beneficial conversion feature model after adoption of ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40). Discussion related to application of the guidance prior to adoption of ASU 2020-06 was moved to FSP 126.96.36.199A.
- FSP 188.8.131.52 and FSP 184.108.40.206A were updated to discuss changes to the calculation of the adjustment to the numerator of basic EPS related to convertible preferred instruments with down round features before and after adoption of ASU 2020-06.
- FSP 220.127.116.11 was added to discuss adjustments to the numerator of basic EPS for equity-classified written call options after adoption of ASU 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40).
- FSP 18.104.22.168 was updated to discuss EPS presentation considerations when a reporting entity has two classes of common stock that have identical rights and privileges, except for voting rights.
- FSP 22.214.171.124 was updated to discuss the impact of liability-classified penny warrants on the computation of basic and diluted EPS.
- Example FSP 7-11 in FSP 126.96.36.199 was updated to illustrate application of the treasury stock method for a restricted stock award with a market condition. In addition, discussion of an employee stock purchase plan and an example illustrating use of the treasury stock method after adoption of ASU 2020-06 were added in FSP 188.8.131.52.
- FSP 184.108.40.206 was updated to remove discussion related to the reverse treasury stock method. This guidance was added to FSP 220.127.116.11 and FSP 18.104.22.168A to discuss the treatment of net cash or net share settled forward repurchase contracts in the computation of diluted earnings per share after and before adoption of ASU 2020-06.
- FSP 7.5.6 was updated to discuss application of the if-converted method for convertible securities in the computation of diluted earnings per share after adoption of ASU 2020-06. Discussion related to application of the guidance prior to the adoption of ASU 2020-06 was moved to FSP 7.5.6A.
- FSP 22.214.171.124 was updated to discuss the computation of diluted earnings per share for instruments that are settleable in cash or shares after adoption of ASU 2020-06. Discussion related to application of the guidance prior to the adoption of ASU 2020-06 was moved to FSP 126.96.36.199A.
Revisions made in October 2021
- Question FSP 16-1 was added to FSP 16.2.1 to address balance sheet presentation for entities with group relief.
- FSP 16.6.2 was added related to uncertain tax positions of foreign registrants. This discussion was previously in TX 15.
Revisions made in September 2021
FSP 27, Discontinued operations
- FSP 27.4.1 was updated to clarify the balance sheet presentation of current and noncurrent assets held for sale.
- Discussion of individually significant disposals not eligible for discontinued operations previously included in FSP 188.8.131.52 was removed and is now included in FSP 8.
Revisions made in June 2021
- The order of certain sections within FSP 8 was rearranged, while certain sections were also combined.
- FSP 8.6.2 was updated to expand on the presentation of long-lived assets classified as held for sale including the interaction with the guidance in ASC 205-20, Discontinued operations.
- FSP 8.6.3 was added to include reference to the disclosure requirements in ASC 820, Fair value measurements, and ASC 275, Risks and uncertainties, related to impairments of long-lived assets.
- FSP 8.7.3 was updated to enhance the discussion around the presentation of capitalized implementation costs of a cloud computing arrangement.
- FSP 8.8.1 was updated to include reference to the disclosure requirements in ASC 820, Fair value measurements, and ASC 275, Risks and uncertainties, related to impairments of intangible assets.
- FSP 8.9.1 was updated to include reference to the disclosure requirements in ASC 820, Fair value measurements, and ASC 275, Risks and uncertainties, related to impairments of goodwill.
- FSP 8.10.2 was added to reflect the issuance of ASU 2021-03, Accounting Alternative for Evaluating Triggering Events, and the related disclosure requirements.
FSP 10, Equity method investments
- FSP 10.4 was updated to expand on how an investor should account for a change in the lag period of an investee.
- FSP 10.4.1.2 was updated to include discussion of the applicability of the discontinued guidance to the sale of an equity method investment.
- FSP 10.4.1.3 was updated to include suggested disclosures that a reporting entity may present when an equity method investment is other-than-temporarily impaired.
- FSP 10.4.1.8 was updated to enhance the discussion around discontinued operations presented by an investee and related disclosure considerations for the investor.
- FSP 10.6 was updated to include a reference to investments in limited partnerships, limited liability companies, trusts and similar entities when evaluating required disclosures for investments accounted for in accordance with ASC equity method investments.
- FSP 10.6.1 was updated to include a discussion on the accounting for and disclosure of a guarantee issued by an investor on behalf of an equity method investee.
- FSP 10.6.3 and FSP 10.6.4 were updated to enhance the discussion around the annual reporting disclosure and reporting requirements under Regulation S-X 4-08, S-X 3-09 and interim disclosure and reporting requirements under Regulation S-X 10-01(b)(1).
- FSP 25.1 was updated to highlight the FASB project related to segment disclosure requirements.
This publication has been prepared for general informational purposes, and does not constitute professional advice on facts and circumstances specific to any person or entity. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication. The information contained in this publication was not intended or written to be used, and cannot be used, for purposes of avoiding penalties or sanctions imposed by any government or other regulatory body. PricewaterhouseCoopers LLP, its members, employees, and agents shall not be responsible for any loss sustained by any person or entity that relies on the information contained in this publication. Certain aspects of this publication may be superseded as new guidance or interpretations emerge. Financial statement preparers and other users of this publication are therefore cautioned to stay abreast of and carefully evaluate subsequent authoritative and interpretative guidance.
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