Income Tax Reporting – SEC Reporting – Accounting – Finance


Substantial changes in the provision for income taxes Business combinations (involves pro forma disclosure of their financial statements for the current and previous year to reflect the combined results of these companies ) The integral view is clearly the better way from a theoretical perspective, since the causes of several trades can span an entire calendar year.

For instance, a manager may be given a bonus at the end of December, but he probably had to achieve certain results throughout the entire year to earn it. Otherwise, if one were to adopt the different perspective, interim reporting could yield exceedingly varied results, with some periods revealing inordinately high or low elevation. Disclosures for Interim Reporting Seasonality.

When there are seasonal variations within a company, disclose the seasonal nature of its actions, thus avoiding confusion about unusually high or low results in an interim period. It could also be required to supplement interim reports with financial results for the 12-month intervals completed at the date to the current and preceding years. Contingent items (the importance of which is judged in relation to the annual financial statements) Other-than-temporary impairments Asset and liability fair value information Cost of products sold derivation.

If another method is used through an interim period than at year-end to derive the expense of goods sold, this distinct method has to be revealed, as well as any substantial adjustments resulting from a reconciliation with the annual physical inventory count. Derivative instrument information Changes in accounting principle Earnings per share.

Substantial changes in financial position Disposals of a material Part of the business, or material items considered extraordinary, unusual, or infrequent Changes in accounting quote The level of financial reporting included inside the interim reports of publicly-held companies is lower compared to the requirements for annual financial statements, which can be necessary so as to release interim reports on an accelerated schedule.

To prevent an excessive reduction in the level of reporting, GAAP requires the following minimum content in the financial statements: Comparison of the Integral and Discrete Views Under the different view of producing interim reports, the assumption is that the results reported for a specific interim period are not associated with the earnings and expenses arising through other reporting periods. Under this view, record the whole impact of a transaction within the reporting period, rather than ratably over the entire calendar year.

Listed below are examples of those situations that can arise under the discrete method: Financial instrument reasonable value information Reduced accruals. A substantially smaller number of accruals are likely under the different method, because the premise is that one should not expect the recordation of trades that have not yet arisen. Segment information Prior period adjustment.

When there's a material retroactive prior period adjustment made during any given period, disclosure must be made of the effect on net earnings and earnings per share of any previous period included in the report, in addition to on retained earnings.

However, a business should embrace the integral perspective from the point of view of accounting efficacy; that is, it's extremely time-consuming to keep up a bulk of revenue and expenditure accruals, their continuing adjustments, and documentation of the reasons for them throughout annually. Instead, use the integral view only for the more material transactions that are expected, and utilize the discrete opinion for smaller transactions.

Thus, an organization could accrue the expense for property taxes during the year when the amount is significant, or just record it in the month when the invoice is received, if the amount is small. In addition, GAAP requires that the following standard disclosures found in annual reports additionally be addressed in interim reports: Extraordinary items.

An outstanding item is considered a one-time event, therefore record it entirely within the period when it occurs. Losses and gains. Do not disperse the recognition of a profit or loss across multiple phases. If the accounting department had been to accomplish this, it would permit a company to spread a loss over multiple phases, thus making the loss seem smaller on a per-period basis than it truly is. Expenses charged entirely within current period.

If there are costs wholly charged to expense within an interim period, and for which there are no similar costs in the corresponding interim period of the previous calendar year, the character and amount of the expense ought to be disclosed. Financial statement items.

Includes sales, provision for income taxes, extraordinary items, net earnings, and comprehensive income. Investments in debt and equity securities.

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