Assets Disclosure ChecklistNot less than hundreds types of transaction related to asset to be disclosed by commercial businesses on their financial statement. For public companies, it is a mandatory. Of course these vary from business to business depends on its size and scale. While we know the important of financial statement disclosure for its users, we all also realize that there is no way for any financial statement preparer to remember and present all disclosure requirements.

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This post provides disclosure checklist for assets [all assets] presented in the balance sheet of a commercial business. The disclosure checklist are adapted from the most recent accounting standard called “accounting standard codifications [ASC]. Any disclosures with “For SEC Reporting“, they are adapted from the current Securities Exchange Commision’s regulation which means they are mandated by the SEC. Enjoy! 

 

Cash and Cash Equivalents Disclosure Checklist 

[1].  Segregate and classify the amount of restricted cash according to the nature of the restriction.

[2].  Compensating balances disclosed as to their nature and amount (if use of cash on balance sheet is not restricted, separate presentation on balance sheet is not required).

[3].  Classify cash to be used to settle long-term liability as noncurrent.

[4].  Classify cash to be used to acquire long-lived assets as noncurrent.

[5].  Overdrafts are to be presented as a current liability. 

[6].  If uninsured balances are material, concentration of credit risk must be disclosed.

[7].  For SEC, foreign bank balances are to be distinguished.

 

     
Accounts, Notes, and Loans Receivable Disclosure Checklist

[1].  Separately report each major category of loans and trade receivables.

[2].  Separately report receivables involving officers, employees, and other related parties and disclose amount and nature of transactions.

[3].  State the allowance for doubtful accounts or loan losses and the current period provision.

[4].  Disclose any unearned income, unamortized premiums or discounts, and any net unamortized deferred fees and costs related to loans or trade receivables.

[5].  If unbilled receivables (work in process) are reported, distinguish from billed receivables.

[6].  The recorded investment in loans (and trade receivables, if applicable) on non-accrual status, as of each balance sheet presented is stated.

[7].  State the recorded investment in loans (and trade receivables, if applicable) on accrual status that are past due ninety days or more, as of each balance sheet presented.

[8].  The carrying amount of financial instruments that serve as collateral for borrowings.

[9].  The amount of receivables held for sale.

[10].  The amount and nature of receivables sold without recourse.

[11].  The amount of foreclosed or repossessed assets, which can be included in the other assets category if the notes to the financial statements disclose the amount.

[12].  Credit balances reclassified as a current liability.

[13].  Concentrations of risk.

[14].  Transfers of receivables with recourse.

[15].  For impaired loans, disclose:

  • For each balance sheet: (1)  Investment in impaired loans (2)  Amount of allowance for credit losses (3)  Policy of income recognition for interest.
  • For each income statement, disclose the average investment in impaired loans, interest income recognized and activity in the allowance for credit losses account.

[16].  For noninterest-bearing notes or inappropriate stated interest rates, disclose the discount or premium, the effective rate of  interest and face amount, amortization for the period, and issue costs.

[17].  All other nontrade receivables (e.g., tax refunds, contract claims, etc.) are separately presented.

[18].  The basis for accounting for trade receivables, loans receivable, and lease financings, including those held for sale.

[19].  The method for recognizing interest income on loan and trade receivables, including related fees and costs, and the method of amortizing net deferred fees or costs.

[20].  The accounting policies and methodology  used to estimate the allowance for doubtful accounts and/or loan losses, including the factors that influenced management’s judgment (such as existing economic conditions and historical losses).

[21].  The accounting policies and methodology used to estimate any liability for off-balance-sheet credit losses, including the factors that influenced management’s judgment.

[22].  The policy for placing loans (and trade  receivables, if applicable) on nonaccrual status.

[23].  The policy for recording payments received on loans (and trade receivables, if applicable) that are on nonaccrual status.

[24].  The policy for resuming interest accruals on loans that are on nonaccrual status.

[25].  The policy for charging off uncollectible trade receivables and loans.

[26].  Whether past due or delinquency status is based on how recently payments have been made or on contractual terms.

[27].  Whether aggregate or individual asset basis is used in determining the lower of cost or fair value of nonmortgage loans held for sale.

[28].  The aggregate amount of gains or losses on sales of loans or trade receivables (including the amounts of adjustments to record receivables held for sale at the lower of cost or fair value) separately presented in the financial statements or disclosed in the notes.

[29].  The classification and method of accounting for receivables that can be contractually prepaid or otherwise settled in a way that the entity would not recover substantially all of its recorded investment.

[30].  For certain loans or debt securities acquired in a transfer (per ASC 310-30), the following disclosures are required:

  • How prepayments on loans receivable are accounted for.
  • For loans acquired through purchase,  including in a business combination, separately for loans accounted for as debt securities and for those not accounted for as debt securities: (1)  The outstanding balance (undiscounted cash flows owed) (2)  The carrying amount at the beginning of the period (3)  The carrying amount at the end of the period (4)  A reconciliation of the amount of accretable yield at the beginning of the period to the amount of accretable yield at the end of the period (5)  For loans acquired in the current period (6)  The carrying amount of all loans in a nonaccrual status (7)  For loans not accounted for as debt securities.

  

 

Short-Term Investments Disclosure Checklist

For all classifications (trading, available-for-sale, or held-to-maturity), disclose the following information:

[1]. Fair value.    

[2].  Gross unrealized gains.     

[3].  Gross unrealized losses.     

[4].  Amortized cost for each major security type.     

[5].  Maturity date for those debt instruments held to maturity.     

[6].  For each period for which the results of operations are presented, disclose:  

  • Proceeds from sales of available-for-sale securities and gross realized gains and gross realized losses on those sales.     
  • Basis on which cost was determined in computing realized gain or loss.     
  • Gross gains and gross losses included in earnings from transfers of securities from available-for-sale category into trading category.     
  • Change in net realized holding gain or loss on available-for-sale securities that has been included in separate component of shareholders’ equity during the period.     
  • Change in net unrealized holding gain or loss on trading securities that has been included in earnings during the period.     

[7].  For any sales/transfers from held to maturity classification, disclose:  

  • Cost of security.     
  • Realized or unrealized gain or loss.     
  • Circumstances leading to decision to sell or transfer the security.     

[8].  For SEC reporting—Substantial post-balance-sheet market decline.     

 

Inventory Disclosure Checklist

[1].  Basis of valuation (cost, lower of cost or market, etc.).     

[2].  Cost flow assumptions employed (FIFO, LIFO, etc.).     

[3].  Classification (materials, work in process, etc.), with amounts of inventory in each.     

[4].  Inventory accounting principles peculiar to a particular industry.     

[5].  Pledging of inventories in borrowing agreements.     

[6].  Product financing arrangements.     

[7].  Accrued net losses on firm purchase commitments.     

[8].  Liquidation of LIFO inventories and effects on income.     

[9].  Amount of revenue and costs associated with inventory exchanges recognized at fair value.     

[10].  Lower of cost or market “losses,” if material.

     

 
Investments—Equity Method Disclosure Checklist 

[1].  Name of each investee and the percentage of ownership of common stock.     

[2].  Accounting policies with respect to each of the investments.     

[3].  Difference between the carrying amount for each investment and its underlying equity in the investee’s net assets and the accounting treatment of the difference between these amounts.     

[4].  For those investments which have a quoted market price, the aggregate value of each investment.     

[5].  If investments in investees are considered to have a material effect on the investor’s financial position and operating results, summarized data for the investor’s assets, liabilities, and results of operations.     

[6].  If potential conversion of convertible securities and exercise of options and warrants would have material effects on the investor’s percentage of the investee.     

 

Other Investments Disclosure Checklist

[1]. For equity and debt securities  

a.  Classification as a held-to-maturity or an available-for-sale investment.     
b.  Basis of accounting.     
c.  Any valuation accounts in stockholders’ equity which reflect unrealized gains and losses and any income statement effects.     

[2]. In the reporting entity’s annual financial statements: For all investments for which there is an unrealized loss where impairment has not been recognized because the loss is not considered “other than temporary”  

[3]. Quantitative disclosure in tabular form and aggregated by category of investment under ASC 320 and ASC 958-320, and cost-method investments, as of the date of each balance sheet presented: (1)  The aggregate amount of unrealized losses (2)  The aggregate related fair value of investments with unrealized losses.    

Note: The disclosures in (1) and (2) above are to be segregated by those investments that have been in a continuous unrealized loss position for less than 12 months and those that have been in a continuous unrealized loss position for 12 months or longer.

 

[4]. A narrative as of the date of the most recent balance sheet that provides sufficient information to enable the reader of the financial statements to understand the disclosures in a. above, as well as both the positive and negative information that the investor considered in reaching the conclusion that the impairment is not other than temporary.     

Note: These disclosures may be aggregated by investment category; however, individually significant unrealized losses should not be aggregated.

Examples of relevant information that could be included in this narrative are:

  • The nature of the investments
  • The causes(s) of the impairment(s)
  • The number of investment positions in an unrealized loss position
  • The severity and duration of the impairment(s)
  • Other evidence considered by the investor in concluding that the impairment is not other than temporary (e.g., reports from industry analysts, sector credit ratings, volatility data regarding the fair value of the security, and/or any other relevant information that the investor considered).

  
[5]. For investments valued using the cost method, as of the date of each balance sheet presented in the annual financial statements: (1)  The aggregate carrying amount of all investments valued using the cost method (2)  The aggregate carrying amount of cost-method investments not evaluated for impairment by the investor (3)  The fact that the fair value of a cost-method investment is not estimated by management if no events or changes in circumstances have been identified that potentially would have a significant adverse effect on the investment’s fair value, and either:

  • The investor determined that it is not practicable to estimate the fair value of the investment, or
  • The investor is exempt from estimating fair value.     

 

Property, Plant, and Equipment Disclosure Checklist

[1].  Classes of assets, including separate identification of:

  • Assets held and used.
  • Assets held for sale.
  • Assets under construction and not in service.
  • Idle assets.    

[2].  The bases of valuation.     

[3].  The methods of computing depreciation.     

[4].  The amount of accumulated depreciation either by classes of assets or in total.     

[5].  A description of and the amount of any assets pledged as collateral.     

[6].  Capitalized interest cost:   

  • The total amount of interest cost incurred during the period.     
  • The amount which has been capitalized.     

[7].  Estimated costs to complete, for major construction.     

[8].  Capitalized preproduction costs related  to long-term supply agreements.  Aggregate amount of assets recognized:  

  • Pursuant to agreements providing  for contractual reimbursement of preproduction design and development costs.       
  • Molds, dies, and other tools that the supplier owns.   
  • Molds, dies, and other tools that the supplier does not own.    

[9].  Asset retirement obligations (ARO):  

  • General description of ARO and the related long-lived assets.     
  • Description of how the fair value of the liability for ARO was determined.     
  • Funding policy, if any, for ARO.     
  • Fair value of assets, if any, that are legally restricted to satisfy the liability.     
  • Reconciliation of the beginning and ending aggregate carrying amount of the
    liability separately showing the changes resulting from   (1)  Additional liability incurred during the current period (2)  Settlements of the liability during the current period (3) Accretion expense (4)  Revisions in expected cash flows. (5)  Explanation of any significant changes in ARO not otherwise apparent.     

[10].  Impairment of assets classified as held and used:  

  • Description of impaired assets  (asset groups) and situation surrounding the impairment.    
  • Amount of the impairment loss and the method used to determine fair value.     
  • If impairment losses are not reported separately or parenthetically, the caption that includes the losses.     
  • For SEC registrants: the business segment affected.     
  • Disclosures required for exit and disposal activities, and discontinued operations (including lessee’s early termination of leases and early termination of other executory contracts).

     

 
Goodwill, Identifiable Intangibles, and Other Assets 

[1].  For goodwill, a reconciliation of changes in the carrying amount during the period, showing separately:  

  • The gross amount and accumulated impairment losses at the beginning of the period.    
  • Additional goodwill recognized during the period, except goodwill that is included in a disposal group that, upon acquisition, meets the criteria in ASC 360 to be classified as held for sale.     
  • Adjustments resulting from the subsequent recognition of deferred income tax assets during the period (ASC 805-740).     
  • Goodwill included in a disposal group classified as held for sale.     
  • Goodwill derecognized during the period without having previously been reported in a disposal group classified as held for sale.     
  • Impairment losses recognized during the period.     
  • Net foreign exchange differences arising during the period.     
  • Any other changes in carrying amounts during the period.     
  • The gross amount and accumulated impairment losses at the end of the period.    

[2].  Goodwill impairment losses recognized during the period  

  • The facts and circumstances causing the impairment.     
  • The method of determining fair value of the associated reporting unit (whether based on quoted market prices; prices of comparable businesses; or present value or other valuation techniques; or a combination of these methods).   
  • If the amount recognized is an estimate  that has not yet been finalized, that fact and the reasons why the estimate is not yet complete.     

[3].  Goodwill impairment losses that had been estimated in prior periods. In periods subsequent to recognition of an estimated goodwill impairment loss, disclose the nature and amount of any significant adjustments made to the initial estimate.     

[4].  For each major class of intangible asset, for each period-end for which a balance sheet is presented:  

  • For amortizable intangibles: (1)  Gross carrying amount and accumulated amortization, in total and by major class of intangible asset (2)  Amortization expense for the period (3)  Estimated aggregate amortization expenses for each of the five succeeding fiscal years as of the date of the latest balance sheet presented.     
  • For intangible assets not subject to amortization, the  total carrying amount and the carrying amount for each major intangible asset class.
  • The entity’s accounting policy on the treatment of costs incurred to renew or extend the term of a recognized intangible asset.
  • For intangible assets that have been renewed or extended in the period for which the balance sheet is presented: (1)  For entities that capitalize renewal or extension costs, the total amount of costs incurred in the period to renew or extend the term of a recognized intangible asset, by major intangible asset class (2)  The weighted-average period prior to the next renewal or extension (both explicit and implicit), by major intangible asset class.     

[5].  For each impairment loss recognized related to an intangible asset (other than goodwill), the following disclosures are to be made in financial statements that include the period the loss is recognized:  

  • A description of the impaired intangible asset.     
  • The facts and circumstances that caused the impairment.     
  • The amount used to determine fair value.     
  • The amount of the impairment loss, and the caption of the income statement in which it is included.     

[6].  In the period of acquisition either individually or in a group of assets, as part of an asset acquisition transaction or a business combination, the following information as of acquisition date.  This information is to be disclosed separately for each material business combination or in the aggregate for individually immaterial business combinations that are material collectively if the aggregate fair values of the intangible assets acquired, other than goodwill, are significant:

  • For each class of intangible asset subject to amortization: (1)  The total amount assigned and the amount assigned to any major intangible asset class (2)  The amount of any significant residual value, in total and by major intangible asset class (3)  The weighted-average amortization period, in total and by major intangible asset class.     
  • For intangible assets  not  subject to amortization, the total amount assigned and the amount assigned to any major intangible asset class.     
  • For intangible assets with renewal or extension terms, the weighted-average period prior to the next renewal or extension (both explicit and implicit) by major class of intangible asset.     

[7].  For entities subject to segment reporting requirements under ASC 280:  

  • The disclosures regarding goodwill in H.1. above are to be provided in total and for each reportable segment along with any significant changes in the allocation of goodwill by reportable segment.     
  • If any portion of goodwill has not yet been allocated to a reporting unit at the date the financial statements are issued, disclosure is to be made of that amount and the reasons it has not yet been allocated.     
  • For any impairment losses recognized with respect to intangible assets other than goodwill, disclose the reportable segment in which the impaired intangible asset is reported.     

[8].  Research and Development (R&D) Activities:  

  • The amount of R&D assets acquired  in a transaction other than a business combination and written off in the period and the line item in the income statement in which the amounts written off are included.     
  • The total research and development costs charged to expense for each period for which an income statement is presented.     
  • For contractual agreements (1)  The terms of significant agreements under the R&D arrangements as of the date of each balance sheet presented (2)  The amount of compensation earned and costs incurred under contract for each period for which an income statement is presented.     

[9].  Deferred charges and other assets:  

  • Charges, segregated by type.     
  • Carrying value of capitalized computer software.     

[10]. Computer software:  

  • Capitalized value.    
  • Amortization.    
  • Write-downs to realizable value.     

[11]. Capitalized direct-response advertising.     

[12].  For obligations to service financial assets:  

  • Amounts of servicing assets/liabilities recognized and amortized.     
  • Fair value of items (methods and assumptions).     
  • Risk and amounts of impairment.     

 

Accounting for Transfers and Servicing of Financial Assets 

[1].  For all servicing assets and liabilities:  

  • The amounts recognized and amortized during the period.     
  • Fair value of such recognized items including methods and assumptions.     
  • Risk characteristics of assets used to measure impairment.     
  • Activity in the valuation allowance for impairment.     

[2].  For securitizations accounted for as a sale:  

  • Accounting policies for initially and subsequently measuring retained interests, including how fair value was determined.     
  • A description of the entity’s continuing involvement with the transferred assets.    
  • The gain or loss from the securitizations.    
  • The key assumptions used in measuring  the fair value of retained interests, both initially and subsequently.     
  • A sensitivity analysis or stress test showing the hypothetical effect on the fair value of retained interests for two or more variations from the expected level for each key assumption used in measuring the fair value of retained interests.     
  • Cash flows between the securitization SPE and the entity.     

[3].  For securitized assets that the entity continues to service  

  • The total principal amount outstanding of the securitized assets and any other financial assets that the entity manages with them, the portion that has been derecognized, and the portion that continues to be recognized for each category reported on the balance sheet.     
  • Delinquencies at the end of the period.     
  • Credit losses, net of recoveries, during the period.     

[4]. Other disclosures:  

  • Security required for repurchase agreements or security lending transactions.     
  • Fair value of assets transferred, or description and reasons why fair value cannot be measured.     
  • Any assets pledged as collateral that are not separately reported on the face of the balance sheet.     
  • Fair value of any assets accepted as collateral, and the amount that has been sold or re-pledged.