List and Discuss the Types of Information Commonly Disclosed in the Footnotes

question 38

Essay

List and discuss the types of information commonly disclosed in the footnotes to corporate financial statements.
a.Accounting policies.APB Opinion No.22,"Disclosure of Accounting Policies" See FASB ASC 235),required all companies to disclose both the accounting policies the firm follows and the methods it uses in applying those policies.Typically,companies disclose this information in a Summary of Significant Accounting Policies preceding the footnotes.Specifically,APB Opinion No.22 required that the accounting methods and procedures involving the following be disclosed:
i.A selection from existing acceptable alternatives.
ii.Principles and methods peculiar to the industry in which the reporting entity operates.
iii.Unusual or innovative applications of GAAP.
b.Schedules and exhibits.-Firms typically report schedules or exhibits concerning long-term debt and income tax,for example.The purpose of supplementary schedules is to improve the understandability of the financial statements.They may be used to highlight trends,such as five-year summaries;or they may be required by FASB pronouncements,such as information on current costs.
c.Explanations of financial statement items.-Some items require additional explanation so that users can make sense of the reported information.Pensions and postretirement benefits are two examples.Parenthetical disclosures are contained on the face of the financial statements usually on the balance sheet).They are generally used to describe the valuation basis of a particular financial statement element but also may provide other kinds of information,such as the par value and number of shares authorized and issued for various classes of a company's stock
d.General information about the company.-Occasionally,firms face events that may impact their financial performance or position but cannot yet be recognized on the financial statements.In that case,investors have an interest in learning this information as soon as possible.Information concerning subsequent events and contingencies are two examples.

---

Definitions:

Geographic Location

The specific physical position or area where something exists or occurs, often defined in terms of latitude and longitude.

Information System

A system comprising people, processes, data, and technology that serves to collect, process, store, and deliver information.