On November 4th, 2024, the Financial Accounting Standards Board (FASB) published an Accounting Standards Update (ASU), No. 2024-03 titled Disaggregation of Income Statement Expenses, which improves financial reporting by requiring public companies to disclose additional information about certain costs and expenses in the notes to financial statements. This ASU aims to improve financial reporting by requiring that public business companies disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods.

Effective after December 15th, 2026, for annual periods and after December 15th, 2027, for interim periods, companies will be required to specifically disclose the amounts of purchases of inventory, employee compensation, depreciation, and intangible asset amortization, as well as any depreciation, depletion, and amortization recognized specifically as part of oil and gas producing activities, included in each relevant expense caption on the income statements. Currently, Topic 220, Income Statement – Reporting Comprehensive Income, does not require the presentation of these specific expense captions on the face of the income statement. Companies must also disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively. Finally, companies should disclose the amount of selling expenses, including the company’s definition of selling expenses, in annual reporting periods.

Following along with these evolving standards, the experts at Chess Consulting are positioned to support clients in meeting their technical accounting and financial reporting needs.  We provide a comprehensive range of services to the Office of the CFO.  Explore our website to learn more.