In response to long-standing investor requests for greater disaggregated income statement information, in November 2024 the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (ASU 2024-03). Under ASU 2024-03, public business entities are required to disclose in the notes to their financial statements disaggregated information about certain costs and expenses in both annual and interim filings. ASU 2024-03 also integrates existing disclosure requirements about certain expenses into the same tabular disclosure as the disaggregated expenses. Finally, the ASU requires qualitative disclosure of amounts that are not quantitatively disclosed in the tabular disclosure, the disclosure of total selling expenses and, in annual reports, an entity must disclose its definition of selling expenses. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted.
Our Financial Reporting Insights provides an overview of the new requirements, including illustrative examples from ASU 2024-03, and certain items to keep in mind for 2024 year-end reporting.
