The FASB has issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures that is intended to enhance the transparency and decision usefulness of an entity’s expense disclosures. ASU 2024-03 enables investors to better understand the major components of an entity’s expenses on its income statement as investors will be able to reference specific disclosures in the notes to financial statements. 

ASU 2024-03 requires that an entity disclose the amounts of (a) purchases of inventory, (b) employee compensation, (c) depreciation, and (d) intangible asset amortization included in each relevant expense caption presented on the income statement. A definition of selling expenses along with the total amount of such expenses is also required. ASU 2024-03 also indicates that all amounts required to be disclosed, by this or any other existing GAAP, should be presented in a single footnote, along with a qualitative description of amounts remaining in relevant expense captions that are not separately disclosed. 

This ASU applies to public business entities only. ASU 2024-03 can be applied either prospectively or retrospectively. The provisions of this ASU are effective for annual periods beginning after December 15, 2026 and for interim periods beginning after December 15, 2027.

The full text of ASU 2024-03 can be found here. 

Published: 12/01/2024

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