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29.4 Interim footnote disclosures
Publication date: 30 Nov 2021 (updated 30 Sep 2022)
us Financial statement presentation guide
Since interim periods are an integral part of an annual period, reporting entities can assume stakeholders have access to annual financial information and can prepare most of their disclosures in the context of an update to the most recently filed annual financial statements. ASC 270 also acknowledges the need to balance the timeliness of interim financial reporting and the amount of detail disclosed, and therefore provides more limited disclosure requirements for interim financial information as compared to annual financial statements.
As such, interim reporting generally should not simply repeat information disclosed in the previous annual financial statements (e.g., significant accounting policies or details of account balances that have not changed significantly). Instead, disclosures should typically focus on items that have changed significantly since year end or events that occurred subsequent to the annual financial statements (e.g., new borrowings, business combinations or dispositions, debt or equity issuances, debt modifications, etc.). S-X 10-01(a)(5) further discusses the types of items that should be disclosed.
In addition, there may be circumstances in which information is not significant in the context of the annual results of operations but is material in the context of the interim results. This information should be discussed in the interim report.
Certain disclosures may also be necessary to ensure comparability with prior periods.
Some costs and expenses incurred in an interim period, however, cannot be readily identified with the activities or benefits of other interim periods and shall be charged to the interim period in which incurred. Disclosure shall be made as to the nature and amount of such costs unless items of a comparable nature are included in both the current interim period and in the corresponding interim period of the preceding year.
Although the interim footnote disclosures should be prepared using this overarching guidance, US GAAP also requires specific interim disclosures. The following subsections discuss certain interim footnote disclosures required by ASC 270 and Article 10. FSP 29.4.1 through FSP 29.4.8 includes general recurring interim disclosure requirements. FSP 29.4.10 includes disclosure requirements for certain transactions.
29.4.1 Consistent interim and annual reporting requirements
Figure FSP 29-2 lists the more significant accounting topics that have consistent interim and annual reporting requirements. It also provides references of where to find more information about the annual disclosure requirements.
Figure FSP 29-2
General recurring topics with consistent interim and annual disclosure requirements
General recurring topics with consistent interim and annual disclosure requirements
Topic |
Reference |
Contingencies |
FSP 23 and FSP 29.4.1.1 |
Debt and equity securities |
|
Derivatives and hedging |
|
Earnings per share |
|
Financial instruments |
|
Registered guarantors/guarantees |
FSP 12 and FSP 31.3 |
Related parties |
|
Taxes collected from customers and remitted to government authorities |
|
Noncontrolling interests |
|
Variable interest entities |
29.4.1.1 Contingencies
ASC 270-10-50-6 indicates that contingencies and other uncertainties that could affect the fairness of presentation of interim financial data should be disclosed in interim reports in the same manner as required for annual reports. Disclosures should be repeated or updated as applicable in all reporting periods until the contingencies have been removed, resolved, or have become immaterial. However, since interim financial statements include year-to-date information, contingencies resolved during one quarter of a fiscal year should continue to be disclosed in the subsequent quarterly financial statements of the same fiscal year. When assessing whether a transaction or uncertainty is material for purposes of disclosure, materiality should be assessed in relation to the annual financial statements.
29.4.2 Defined benefit plans and other postemployment benefits
The following interim disclosures should be provided for defined benefit pension plans and other defined benefit postretirement benefit plans of publicly traded reporting entities in interim periods.
Excerpt from ASC 270-10-50-1(j)
- The amount of net periodic benefit cost recognized, for each period for which a statement of income is presented, showing separately the service cost component, the interest cost component, the expected return on plan assets for the period, the gain or loss component, the prior service cost or credit component, the transition asset or obligation component, and the gain or loss recognized due to a settlement or curtailment
- The total amount of the employer’s contributions paid, and expected to be paid, during the current fiscal year, if significantly different from amounts previously disclosed.... Estimated contributions may be presented in the aggregate combining all of the following:
- Contributions required by funding regulations or laws
- Discretionary contributions
- Noncash contributions.
The disclosures should be provided for all periods presented. The amounts should reflect the actual expense recorded and should not be changed to reflect “normalized” expense for the year.
As discussed in ASC 715-60-50-1 through ASC 715-60-50-6, reporting entities should also disclose certain information about the Medicare subsidy effects on its postretirement health care benefit plan. See FSP 13 for further information on these disclosures.
29.4.3 Equity method investees
Article 10 requires certain disclosure for equity method investees.
S-X 10-01(b)(1)
Summarized statement of comprehensive income information shall be given separately as to each subsidiary not consolidated or 50 percent or less owned persons or as to each group of such subsidiaries or fifty percent or less owned persons for which separate individual or group statements would otherwise be required for annual periods. Such summarized information, however, need not be furnished for any such unconsolidated subsidiary or person which would not be required pursuant to Rule 13a-13 or 15d-13 to file quarterly financial information with the Commission if it were a registrant.
While SEC registrants are required to disclose interim comprehensive income information, as discussed in S-X 10-01(b)(1), it is not necessary to disclose interim balance sheet information of equity method investees.
See FSP 10 for further information on disclosures required for equity method investments in interim periods.
29.4.4 Financial assets and allowances for credit losses
ASC 270-10-50-1(p) requires reporting entities to disclose the following information about the credit quality of financing receivables and the allowance for credit losses:
- Nonaccrual and past due financial assets
- Allowance for credit losses related to financial assets
- Credit-quality information for instruments within the scope of ASC 326-20
- Modifications of financing receivables
The disclosures should be provided for all periods presented (see FSP 29.3).
The disclosures related to past-due and nonaccrual status financial assets are not required for trade receivables that are due in less than a year and that result from revenue transactions in the scope of ASC 606, except for credit card receivables. They are also not required for receivables measured at the lower of amortized cost basis or fair value.
29.4.4A Financing receivables and allowances for credit losses (pre-ASC 326)
ASC 270-10-50-1(p) requires reporting entities to disclose the following information about the credit quality of financing receivables and the allowance for credit losses:
- Nonaccrual and past due financing receivables
- Allowance for credit losses related to financing receivables
- Impaired loans
- Credit-quality information related to financing receivables
- Modifications of financing receivables
The disclosures should be provided for all periods presented (see FSP 29.3).
29.4.5 Reportable operating segments
Reduced segment disclosures discussed in ASC 280-10-50-32 may be presented when condensed financial statements of interim periods are issued. If a complete set of financial statements is presented in an interim period, then the full disclosure requirements of ASC 280 apply. Refer to FSP 25.7.7 for discussion of presentation and disclosure requirements for segments in interim periods.
29.4.6 Seasonal revenue, costs, or expenses
Certain reporting entities are subject to seasonal variations, which could cause interim results to not be indicative of the estimated results for the full fiscal year. Reporting entities subject to material seasonal variations should disclose the seasonal nature of their activities. They should also consider supplementing interim financial information with information from the 12-month period ended as of the most recent interim date along with comparative data from the corresponding 12-month period of the prior year.
For example, per S-X 10-01(c)(4), certain agricultural reporting entities may present rolling 12-month statements of comprehensive income and cash flows in lieu of year-to-date statements if management believes it is more appropriate and necessary for an understanding of the impact of seasonal fluctuations.
Some SEC registrants may also elect to present balance sheets as of the end of the prior year quarter as supplemental disclosure for comparative purposes.
29.4.7 Revenue from contracts with customers
ASC 270 requires reporting entities to provide certain disclosures about revenue from contracts with customers in interim financial statements. Interim reporting requirements for revenue, receivables, contract assets, contract liabilities, and remaining performance obligations arising from contracts with customers are as follows:
Excerpt from ASC 270-10-50-1A
- A disaggregation of revenue for the period…
- The opening and closing balances of receivables, contract assets, and contract liabilities from contracts with customers (if not otherwise separately presented or disclosed)…
- Revenue recognized in the reporting period that was included in the contract liability balance at the beginning of the period…
- Revenue recognized in the reporting period from performance obligations satisfied (or partially satisfied) in previous periods (for example, changes in transaction price)…
- Information about the entity’s remaining performance obligations as of the end of the reporting period
29.4.8 Leases
A lessor is required to disclose its lease income in a tabular format in each interim reporting period (ASC 270-10-50-6A).
For sales-type and direct financing leases, this tabular disclosure should include the following:
- Profit or loss recognized at the commencement date, disclosed on either a gross or net basis based on its business model
- Interest income, either in aggregate or separated by components of the net investment in the lease
- Lease income relating to variable lease payments not included in the measurement of the lease receivable
A lessor should also disclose the components of its aggregate net investment in sales-type leases and direct financing leases including:
- The carrying amount of its lease receivables
- Its unguaranteed residual assets
- Any deferred selling profit in direct financing leases (which is a reduction to the net investment)
For operating leases, this tabular disclosure should include lease income relating to lease payments, including lease income relating to variable lease payments.
Refer to FSP 14 for a summary of the annual presentation and disclosure guidance related to ASC 842, Leases.
29.4.9 Supplier finance programs after adoption of ASU 2022-04
ASU 2022-04, Disclosure of Supplier Finance Program Obligations, requires disclosures about supplier finance programs, including an interim disclosure. ASC 405-50-50-4 requires reporting entities to disclose in interim periods the amount of obligations under a supplier finance program that have been confirmed as valid and remain outstanding at the end of the period.
In addition, during the fiscal year of adoption, the information on the key terms and balance sheet presentation, which are annual disclosure requirements, should also be disclosed in each interim period. For all entities, the amendments are effective for fiscal years beginning after December 15, 2022 with early adoption permitted. The requirements related to the interim disclosures should be applied retrospectively to each period in which a balance sheet is presented.
See FSP 11.3.1.5 for further information on supplier finance programs.
29.4.10 Other interim reporting requirements
Additional disclosure may be necessary as a result of events or transactions that occur in the interim period. The following subsections discuss several of these situations.
29.4.10.1 Business combinations
The disclosure requirements of ASC 805, Business Combinations, are applicable for business combinations that occur either during the current reporting period, or after the reporting date but before the financial statements are issued. Therefore, the required disclosures should be included in interim financial statements, as applicable.
If the transaction is reflected as a combination of entities under common control, S-X 10-01(b)(3) requires supplemental disclosure of the separate results of the combined entities for periods prior to the combination. See FSP 30.6 for further discussion regarding entities under common control or change in reporting entities.
29.4.10.2 Change in accounting principle or change in estimate
Reporting entities may make a change in accounting principle (e.g., adopt a new accounting standard or acknowledge the impact of a change for a standard not yet adopted) or change an accounting estimate during an interim reporting period. FSP 30.4.3 discusses the presentation and disclosure requirements for both of these events.
29.4.10.3 Identification of an error
Reporting entities may identify an error during an interim reporting period. FSP 30.7 discusses the presentation and disclosure requirements for error corrections.
In addition, the SEC staff requires registrants that adopt a new accounting standard during an interim period to include all required annual disclosures in any interim financial statements that are prepared until the next annual financial statements are filed. This is true even if the disclosure requirements of new accounting standards are only applicable for annual periods.
Article 10 requires certain disclosures for retroactive prior period adjustments made during any period covered by interim financial statements.
S-X 10-01(b)(7)
Any material retroactive prior period adjustment made during any period covered by the interim financial statements shall be disclosed, together with the effect thereof upon net income - total and per share - of any prior period included and upon the balance of retained earnings. If results of operations for any period presented have been adjusted retroactively by such an item subsequent to the initial reporting of such period, similar disclosure of the effect of the change shall be made.
29.4.10.4 Discontinued operations
Reporting entities may meet the requirements to report discontinued operations during an interim reporting period. The disclosure requirements of ASC 205-20-50-1 through ASC 205-20-50-7 should be followed for interim reporting periods. See FSP 27 for discussion of these disclosure requirements.
If discontinued operations are reported net of tax in the annual financial statements, they should be similarly reported in the interim financial statements. See FSP 27.4.2.
29.4.10.5 Disposal of reporting entity component and unusual items
As discussed in ASC 270-10-45-11A, material effects of disposals of a component of a reporting entity and unusual and infrequently occurring transactions and events should be reported separately.
29.4.10.6 Significant change in estimates for income taxes
Reporting entities should make their best estimate of the effective tax rate expected to be applicable for the full fiscal year for interim reporting purposes and, as discussed in ASC 270-10-50-1(d), should disclose any significant changes in such estimates from period to period. If a reporting entity determines that it is unable to reliably estimate its annual effective tax rate, the discrete-period computation method may be used. The reporting entity’s assertion that it cannot reliably estimate its annual effective tax rate should be disclosed so that financial statement users can understand the manner in which the interim tax provision was determined.
When a reporting entity applies the requirements of ASC 740, Income Taxes, in interim periods, a significant variation in the customary relationship between income tax expense and pretax income may result. The reasons for significant variations during interim periods should be disclosed, unless the reasons are apparent from the financial statements or the nature of the reporting entity’s business.
In addition, as discussed in ASC 270-10-50-3, reporting entities should disclose if important developments occur during the year, including those impacting tax-related balances. Reporting entities should also consider disclosure if the tax amounts reported for the interim periods do not adequately reflect events that the reporting entity expects to occur later in the year. Interim period disclosures related to income taxes often include:
- Tax effects of significant unusual or infrequent items that are recorded separately or items that are reported net of their related tax effect
- Significant changes in estimates or provisions for income taxes (e.g., changes in the assessment of the need for a valuation allowance that occur during the period)
- Material changes to (1) uncertain tax benefits, (2) amounts of uncertain tax benefits that if realized would affect the estimated annual effective tax rate, (3) total amounts of interest and penalties recognized in the balance sheet, (4) positions for which it is reasonably possible that the total amount of uncertain tax benefits will significantly increase or decrease within the next 12 months, and (5) the description of tax years that remain open by major tax jurisdiction
Material changes in unrecognized tax benefits that occur during an interim period should be disclosed during the interim period. A reporting entity should not delay disclosure of material changes until the end of the annual reporting period.
29.4.10.7 Other interim reporting requirements for certain non-recurring transactions that are consistent with annual reporting requirements
ASC 270-10-50-6 requires disclosure in the interim financial statements of material, non-recurring events occurring subsequent to the end of the most recent fiscal year. Figure FSP 29-3 lists the more significant accounting topics that are non-recurring in nature that have consistent interim and annual reporting requirements, and includes references to the discussion of the annual disclosure requirements.
Figure FSP 29-3
Non-recurring topics with consistent interim and annual disclosure requirements
Non-recurring topics with consistent interim and annual disclosure requirements
In addition, reporting entities are required to make disclosures about collaborative arrangements in the period in which they commence and all subsequent annual periods (see FSP 3).
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