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2.2 Balance sheet scope and relevant guidance
Publication date: 30 Sep 2022
us Financial statement presentation guide
ASC 205, Presentation of Financial Statements, and ASC 210, Balance Sheet, provide authoritative guidance for presentation of the balance sheet for all US GAAP reporting entities. These rules closely align with SEC regulations, except for certain circumstances in which the SEC prescribes incremental requirements.
Commercial and industrial companies that are SEC registrants are generally subject to S-X Article 5, and should also comply with the guidance regarding presentation of the balance sheet in SAB Topic 11.E (codified in ASC 205-10-S99-9) and Article 3 and Article 4 within Regulation S-X:
- S-X Article 5 provides for the presentation of the balance sheet and notes additional schedules that may be required.
- SAB Topic 11.E provides guidance on the chronological ordering of financial data.
- Article 3 provides general instructions applicable to all registrants. In particular, S-X 3-01 stipulates that the registrant and its subsidiaries should file a consolidated balance sheet as of the end of each of the two most recent fiscal years.
- Article 4 (S-X 4-01 through S-X 4-03) provides general application rules regarding the form and order of the balance sheet and other statements.
Reporting entities subject to other SEC regulations include registered investment companies and business development companies (Article 6), employee stock purchase, savings and similar plans (Article 6A), insurance companies (Article 7), smaller reporting companies (Article 8), bank holding companies (Article 9), and brokers and dealers when filing Form X-17A-5. While Article 5 requires a classified balance sheet, no other articles within S-X contain this requirement. Reporting entities subject to the articles referred to above should refer to the applicable S-X guidance to determine their requirements.
2.2.1 Sample balance sheets
Figure FSP 2-1 is an illustrative balance sheet prepared based on the following conventions:
- Captions not required by SEC rules, but either required by US GAAP or often included in a typical presentation are in regular font.
- Captions required by S-X 5-02 are in bold font.
- If S-X 5-02 provides an option to include information in a footnote rather than on the face of the balance sheet, the caption is in regular font.
Detailed presentation and disclosure requirements are addressed in FSP 2.3.3. For each balance sheet caption, the last column of Figure FSP 2-1 includes a reference to the relevant FSP guide chapter where more information can be found. The captions included on a balance sheet may vary based on each reporting entity's facts. Further, certain required captions may not be applicable to all reporting entities.
Figure FSP 2-1
Sample consolidated balance sheets under S-X 5-02
Sample consolidated balance sheets under S-X 5-02
FSP Corp Consolidated Balance Sheets December 31, 20X2 and 20X1 |
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Assets |
December 31, 20X2 |
December 31, 20X1 |
FSP guide chapter reference |
|
(in millions $, except per share data) |
(in millions $, except per share data) |
|||
Current assets |
||||
Marketable securities at fair value (amortized cost of $xxx in 20X2 and $xxx in 20X1)
|
xxx |
xxx |
||
Net investment in leased property
|
xxx |
xxx |
FSP 14.4A |
|
Total current assets |
xxx |
xxx |
||
Net investment in leased property, noncurrent
|
xxx |
xxx |
FSP 14.4A |
|
Property, plant, and equipment, net of accumulated depreciation, depletion, and amortization of $xx and $xx
|
xxx |
xxx |
||
Total assets |
$ xxx |
$ xxx |
||
Liabilities, redeemable preferred stock, and stockholders’ equity |
December 31, 20X2 |
December 31, 20X1 |
FSP guide chapter reference |
||
(in millions $, except per share data) |
(in millions $, except per share data) |
||||
Current liabilities |
|||||
Current portion of obligations under capital leases |
xxx |
xxx |
FSP 14.3A |
||
Total current liabilities |
xxx |
xxx |
|||
Bonds, mortgages and other long-term debt, including capitalized leases Less: Unamortized discount and issuance costs |
xxx |
xxx |
FSP 12/FSP 14 |
||
Noncurrent portion of obligations under capital leases |
xxx |
xxx |
FSP 14.3A |
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Total liabilities |
xxx |
xxx |
|||
Redeemable preferred stock
Class D - subject to redemption ($0.01 par value; authorized – xxxx shares; issued and outstanding – xxx and xxx shares) |
xxx |
xxx |
|||
Stockholders’ equity |
|||||
Non-redeemable preferred stock Class C ($0.01 par value; authorized – xxxx shares; issued and outstanding – xxx and xxx shares) |
xxx |
xxx |
|||
Common stock – Class A ($0.01 par value; authorized – xxxx shares; issued and outstanding – xxx and xxx shares) |
xxx |
xxx |
|||
Total stockholders’ equity attributable to FSP Corp stockholders |
xxx |
xxx |
|||
Total stockholders’ equity |
xxx |
xxx |
|||
Total liabilities, redeemable preferred stock, and equity |
$ xxx |
$ xxx |
|||
See Notes to the Consolidated Financial Statements
1 S-X 5-02(1) requires segregation on the balance sheet of funds legally restricted as to withdrawal, including compensating balances. The provisions of any restrictions should be described in a note to the financial statements.
2 ASC 825-10-45-1A requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e., securities or loans and receivables) on the balance sheet or in the footnotes. See FSP 9.4.
3 The caption in S-X 5-02 is “accounts and notes receivable.” This balance sheet assumes that each account is material and is included individually. S-X 5-02 requires separate captions for amounts receivable from (1) customers (trade), (2) related parties, (3) underwriters, promoters, and employees (other than related parties) that arose in other than the ordinary course of business, and (4) others.
4 S-X 5-02 permits allowances to be set forth separately on the balance sheet or in a note. ASC 210-10-45-13 requires allowances to be deducted from the asset group to which they relate.
5 If leasing is a significant part of the lessor’s business activities (as measured by revenue, net income, or assets), the lessor should disclose the components that make up its net investment in sales-type or direct financing leases under ASC 840. See FSP 14.4.3.2A for more details. See LG 9.3 for presentation and disclosure requirements for a lessor under ASC 842.
6 S-X 5-02 requires separate captions for (1) deferred income taxes, (2) deferred tax credits, and (3) material items of deferred income. ASC 740 requires a reporting entity to net all deferred tax assets and liabilities by tax paying component for each jurisdiction, along with any related valuation allowance, and classify each tax paying component’s net deferred tax balance as noncurrent.
7 S-X 5-02(14) requires the amount of accumulated depreciation, depletion, and amortization of property, plant, and equipment to be presented separately in the balance sheet or in a note. Per ASC 840-30-50-1(a) assets recorded under capital leases may be combined with owned assets, and are often included in the Property, Plant, and Equipment line item. Refer FSP 14.1 for the ASC 842 presentation and disclosure requirements.
8 Caption required by ASC 350-20-45-1.
9 The caption in S-X 5-02 is "accounts and notes payable." This balance sheet assumes that each account is material and is included individually. S-X 5-02 does require separate captions for amounts payable to (1) banks for borrowings; (2) factors or other financial institutions for borrowings; (3) holders of commercial paper; (4) trade creditors; (5) related parties; (6) underwriters, promoters, and employees (other than related parties); and (7) others. Amounts applicable to (1), (2), and (3) may be stated separately on the balance sheet or in a footnote.
10 Required to be a separate caption, even without a dollar amount, if the reporting entity includes a footnote describing commitments and contingencies. See FSP 23.
11 If applicable, S-X 5-02 requires separate presentation for each issue of redeemable preferred stock (also known as "mezzanine equity" or temporary equity). Determining whether certain instruments are required to be classified as mezzanine equity is discussed in FG 7 and presentation and disclosure of mezzanine equity is discussed in FSP 5.6.3.1.
12 In accordance with S-X 5-02, additional paid-in capital may be combined with the stock caption to which it applies, if appropriate.
13 Caption required by S-X 5-02 and ASC 220-10-45-14.
14 S-X 5-02 requires separate captions for (1) appropriated and (2) unappropriated retained earnings.
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