TheCorporateCounsel.net

On Monday, FASB announced that it had published an Accounting Standards Update that will require publicly traded companies to provide more detail about expenses that are reflected on their income statement. Specifically, ASU 2024-03, Disaggregation of Income Expenses (DISE), will require companies to:

1. Disclose the amounts of (a) purchases of inventory; (b) employee compensation; (c) depreciation; (d) intangible asset amortization; and (e) depreciation, depletion, and amortization recognized as part of oil- and gas-producing activities (or other amounts of depletion expense) included in each relevant expense caption.

2. Include certain amounts that are already required to be disclosed under current generally accepted accounting principles (GAAP) in the same disclosure as the other disaggregation requirements.

3. Disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively.

4. Disclose the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses.

Investors have been calling for this update for several years. I’ve blogged about the “employee compensation” aspect a few times on CompensationStandards.com. This PwC memo explains what the new ASU will require and provides helpful FAQs. Here’s an excerpt that clarifies where the new disclosures will appear:

The new standard does not change the presentation of expense information or expense captions reported on the face of the income statement. Rather, the new standard requires disclosures in the footnotes that provide disaggregated information about an entity’s expense captions that are presented on the face of the income statement within continuing operations.

The new ASU is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027.

– Liz Dunshee