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S-X 5-03(7) and (9) prescribe separate income statement line item captions for non-operating income and non-operating expense. Many SEC registrants prefer to show one line item for non-operating income and expense on a net basis. Generally, the combination of non-operating income and expense is permissible as long as the individual amounts are not significant, with the exception that interest expense and amortization of debt discount must be presented on the face of the income statement (refer to FSP 3.7.3). Note that it is not the net balance that determines materiality, but the offsetting gross amounts.

3.7.1 Non-operating income

S-X 5-03 requires reporting entities to present separately, in the income statement or in a footnote, amounts earned from (a) dividends, (b) interest on securities, (c) profits on securities (net of losses), and (d) miscellaneous other income. Amounts earned from transactions in securities of related parties must also be disclosed as required by S-X 4-08(k). Material amounts included under miscellaneous other income should be separately presented in the income statement or in a footnote, indicating clearly the nature of the transactions out of which the items arose.

3.7.2 Non-operating expenses

S-X 5-03 requires reporting entities to present separately, in the income statement or in a footnote, amounts of losses on securities (net of profits) and miscellaneous income deductions. Material amounts included under miscellaneous income deductions should be separately presented in the income statement or in a footnote, indicating clearly the nature of the transactions out of which the items arose.

3.7.3 Interest expense and amortization of debt discount

S-X 5-03 requires interest expense and amortization of debt discount to be presented on the face of the income statement. See FSP 12 for discussion of the presentation and disclosure requirements associated with debt discounts.
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