ASC 270: Interim Reporting
ASC 270: Interim Reporting is important for publicly traded companies as it clarifies the application of accounting principles and reporting practices to interim financial information. This information is often issued on a monthly or quarterly basis and helps stakeholders make better-informed decisions about the company. In this blog post, we will go over some of the key points of ASC 270 so that you can understand its importance!
What is GAAP?
GAAP is a common set of accounting principles, standards, and procedures. Public companies in the United States must follow GAAP when they compile their financial statements. To that end, the Financial Accounting Standards Board (FASB) maintains GAAP. Moreover, the board issues new rules as necessary to ensure that GAAP remains up-to-date.
Where Can I Research GAAP?
FASB provides free online access to the Accounting Standards Codification, which is the only authoritative source for US GAAP. FASB and the AICPA also provide access to other authoritative literature that supplements the GAAP Hierarchy.
To access the Accounting Standards Codification, visit asc.fasb.org. Anyone can access the codes using a basic account. For more advanced features you can set up a professional account. To that end, if you work at a company subject to GAAP rules, your company likely has a professional account.
What Is Interim Reporting?
Interim reporting is the release of financial information during a fiscal year. This information may take the form of complete financial statements or summarized financial data. Interim reporting helps stakeholders make better-informed decisions about the company.
Interim reporting may include statements like:
– balance sheets
– income statements
– cash flow statements
– statement of changes in equity.
Additionally, interim reporting may include current data during a fiscal year on the financial position, results of operations, comprehensive income, and cash flows. This information is often released on a monthly or quarterly basis.
What is ASC 270?
ASC 270 is a GAAP Topic that clarifies the application of accounting principles and reporting practices to interim financial information. ASC 270 addresses issues such as:
– The form and content of interim financial statements
– The circumstances under which an entity must prepare interim financial statements
– How an entity should measure and report selected items in interim periods
Why Does It Matter?
The presentation and disclosure of financial statements can have a major impact on the decisions made by users of those statements. For example, if a company or individual is considering investing in another company, the investor will want to know on an ongoing basis how the company is performing.
ASC 270 follows the framework set by ASC 205 and requires companies to produce consistent interim reporting that clearly conveys the company’s performance and compares it to a benchmark such as the prior year.
Let’s Recap
Interim reporting is important for publicly traded companies as it can help stakeholders make better-informed decisions about the company. ASC 270 follows the framework set by ASC 205 and requires companies to produce consistent interim reporting that clearly conveys the company’s performance and compares it to a benchmark such as the prior year.
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