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The rules that govern balance sheet presentation are intended to aid comparability between reporting entities. Among other areas, reporting entities should consider the number of reporting periods presented, as well as chronology. While most reporting entities present the balance sheet in order of liquidity (i.e., starting with the most liquid asset, which is cash for most companies), there is no specific ordering requirement within US GAAP. Certain assets may be presented with more prominence depending on their relative importance to the industry (e.g., property, plant, and equipment in the public utilities industry).
Reporting entities should also consider whether individually significant account balances may warrant further disaggregation, classified balance sheet requirements, and the impact of the entity’s operating cycle on classification.

2.3.1 Reporting periods

Presentation of comparative information provides a more comprehensive view of a reporting entity’s financial position as compared to a single period. A US GAAP balance sheet is typically presented for two fiscal years in a comparative format, as described in ASC 205-10-45. Presentation of a balance sheet for a single fiscal year is also in compliance with US GAAP as comparative balance sheets are not required for private companies. However, ASC 205-10-45-2 states that comparative statements are “desirable."
The guidance for SEC registrants is more explicit regarding the required reporting periods for balance sheets. S-X 3-01(a) requires that SEC registrants file the most recent two fiscal years of audited balance sheets.
Prior-year amounts presented in a comparative format are expected to be comparable to those shown in the most recent fiscal year. There may be instances when changes to prior-year amounts are necessary to achieve comparability, such as reclassifications, changes in accounting principles, or corrections of errors. See FSP 30 for further discussion of such changes.

2.3.2 Chronology

SAB Topic 11.E indicates that the chronology of the periods presented in the balance sheet and tables within the financial statements do not require a particular sequence (e.g., earliest period to latest period). However, the reporting entity should consistently use the order chosen throughout the filing (i.e., same chronological order from left to right in each statement and footnote). While this is specific to SEC registrants, we encourage consistent ordering of financial statement presentation for all reporting entities.

2.3.3 Individually significant account balances

S-X 5-02 requires SEC reporting entities to separately present individual balance sheet amounts that exceed certain quantitative thresholds. The criteria for determining whether separate presentation is required on the face of an SEC registrant's balance sheet, or in its footnotes, are as follows:
  • Current assets with amounts greater than 5% of total current assets.
  • Any other assets with amounts in excess of 5% of total assets that are not properly classified in one of the existing asset captions.
  • The aggregate amount of notes receivable, if it exceeds 10% of total receivables.
  • Each class of intangible assets with amounts in excess of 5% of total assets (required to be on the face of the balance sheet per S-X 5-02).
  • Current liabilities with amounts greater than 5% of total current liabilities.

    Reporting entities often separately present items such as accrued interest under this criterion when those balances are individually significant. The current portion of long-term debt is often required to be presented separately as a result of this threshold.
  • Any other liabilities with amounts in excess of 5% of total liabilities that are not properly classified in one of the existing liability captions.

2.3.4 Classified balance sheet

S-X 5-02 requires a classified balance sheet and ASC 210-10-05-4 notes that most reporting entities present a classified balance sheet. A classified balance sheet separates current and noncurrent assets and liabilities and provides useful information regarding a reporting entity’s level of working capital (a metric used in analyzing liquidity and near-term financial condition).
The ASC Master Glossary defines current assets and current liabilities.

Definitions from ASC Master Glossary

Current Assets: Current assets is used to designate cash and other assets or resources commonly identified as those that are reasonably expected to be realized in cash or sold or consumed during the normal operating cycle of the business.

Current Liabilities: Current liabilities is used principally to designate obligations whose liquidation is reasonably expected to require the use of existing resources properly classifiable as current assets, or the creation of other current liabilities.

ASC 210-10-45 provides further guidance on what is included in current assets and current liabilities. The FASB guidance and the SEC guidance are aligned on what is considered current and bases that classification on the reporting entity's operating cycle.

2.3.4.1 Operating cycle

Reporting entities generally use a 12-month cycle when determining whether classification should be current or noncurrent. However, the classification should align with the business' operating cycle, which could be more, but not less, than 12 months.
The ASC Master Glossary defines operating cycle.

Definition from ASC Master Glossary

Operating Cycle: The average time intervening between the acquisition of materials or services and the final cash realization constitutes an operating cycle.

Figure FSP 2-2 summarizes the requirements in ASC 210-10-45-3, which provides guidance on the operating cycle that reporting entities should use in various situations.
Figure FSP 2-2
How to determine time period for current classification
Operating cycle of the business
Operating cycle for determining current classification
Less than one year
One year
Longer than one year (such as a tobacco, distillery, or lumber business)
Same as the business’ operating cycle (i.e., the longer time period)
Not clearly defined
One year
Once the reporting entity determines its operating cycle, it should analyze each asset and liability to determine whether the amounts should be classified as current, noncurrent, or divided between current and noncurrent.
Certain financial statement captions or account balances, such as deferred income taxes (FSP 16), may have their own specific guidance with respect to classification as current or noncurrent that does not necessarily align with the operating cycle determination.
Not all assets and liabilities will have a current and noncurrent allocation. For example, although a portion of property, plant, and equipment and intangible assets will typically be depreciated or amortized during a reporting entity's operating cycle, the amount represents an allocation of the asset cost to operating expenses rather than an amount that is directly realized in cash or through consumption of the asset during the operating cycle; therefore, the entire asset should be classified as noncurrent.
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