FASB
ASU requires companies to disclose specific categories of expenditure, such as inventory purchases, employee compensation and depreciation, in the expenditure headings generally presented as a reduced SG; A and the cost of sales. This level of transparency should help stakeholders obtain more information on an entity’s cost structures and improve their ability to compare results among entities.
Public entities should provide this additional breakdown in their notes to the financial statements during the interim and annual reporting periods. In addition, the amendments order a qualitative description of amounts not allocated quantitatively, which provides a context for residual figures within expenditure limits. Sales costs and associated definitions should also be disclosed in annual reports.
As from 15 December 2026 and the provisional periods of 15 December 2027, the amendments provide for rapid adoption. Entities may apply the provisions in a prospective or retrospective manner, providing flexibility in implementation and harmonizing their current reporting practices.
This update is an important step towards transparency in the financial statements. To address cost disclosure gaps, the AFSCA continues to align financial relationships with the needs of modern investors, building confidence in reported financial results.
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