LOS c: Describe the presentation of, and disclosures relating to, financing liabilities.
At a recent meeting of the Securities and Exchange Commission (SEC), Harold Snead, the Commission’s Chief Accounting Officer, stated that he was concerned with the way firms were disclosing their financing liabilities. Snead claimed that an entity’s disclosures related to financing liabilities should be clear and concise so that analysts and the general public can obtain a better understanding of the activities. He made the following two proposals:
Proposal 1: On the cash flow statement firms should show the cash interest expense so that external users of financial statements can compare this amount to the interest expense on the income statement to see the effect of the issuance of discounted debt.
Proposal 2: Not all off-balance sheet liabilities should be treated alike. Only operating leases and the details associated with these lease liabilities should be disclosed in the footnotes to the financial statements. Other off-balance-sheet liabilities should not require additional details in the footnotes to the financial statements.
With respect to the proposals regarding disclosures related to financing liabilities aid analysts and other end-users of financial statements:
For all off-balance-sheet liabilities, including operating leases, take-or-pay or throughput contracts, and account receivables with recourse, the details of each liability should be provided in the footnotes to the financial statements.
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发表于 2010-4-20 14:12
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