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Regulation S-X Rule 5-03(1) requires separate presentation in the income statement for any of the following revenue categories that exceed 10% of total revenues:
  • Net sales of tangible products (gross sales less discounts, returns, and allowances)
  • Service revenues
  • Income from rentals
  • Operating revenues of public utilities
  • Other revenues
  • Amounts earned from transactions with related parties (as required under Regulation S-X Rule 4-08(k))
The cost and expenses related to each revenue category must also be reflected separately in the income statement.
Each category that is not more than 10% of the sum of the items may be combined with another category. If these items are combined, related costs and expenses shall be combined in the same manner. These threshold rules align with the principle described in Regulation S-X Rule 4-02, which indicates that items that are not material do not need to be shown separately.
These threshold requirements do not apply to interim financial statements, though they are often followed in practice. Interim-specific requirements are discussed in FSP 29.
Figure FSP 33-1 illustrates how revenue and cost of sales may be presented in the income statement.
Figure FSP 33-1
Presentation of revenue and related cost categories
Total revenue
Total cost
Gross margin
Promises to provide more than one good or service to a customer might constitute a single performance obligation under ASC 606. Question FSP 33-1 addresses whether a reporting entity should present components of a single performance obligation as separate categories of revenue.
Question FSP 33-1
A single performance obligation may include multiple promised goods or services that are not distinct and are inputs into a combined item. Should a reporting entity present components of a single performance obligation as separate categories of revenue (e.g., product revenue and service revenue) in the statement of comprehensive income?
PwC response
It depends. We expect reporting entities will often conclude that revenue from a single performance obligation relates to a single revenue category. This is because promised goods or services that are inputs into a single performance obligation are often transformed when combined (e.g., a combination of goods and services that form a single service), which is why the reporting entity has concluded the promised goods or services are not distinct. If a reporting entity concludes a single performance obligation includes components that relate to different categories of revenue (e.g., products and services), we believe it is acceptable to present revenue in separate revenue categories in the statement of comprehensive income using a systematic and rational allocation method that is consistently applied. If material to the financial statements, the reporting entity should provide transparent disclosures regarding the methodology and basis for separating the components for presentation purposes. 


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