# ASC 220-40-55: Income Statement—Reporting Comprehensive Income — Expense Disaggregation Disclosures — 55 Implementation Guidance and Illustrations Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/220/40/#55-implementation-guidance-and-illustrations) Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-09T23:05:07.264Z to 2026-09-09T23:05:07.264Z Record version: sha256:e6cb68e029068ec1c1ba98f50d19061506f96157ef7205c4b920bc413197968f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 220-40-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/220/40/#55-implementation-guidance-and-illustrations) SEC content: no ##### [220-40-55-1](https://asc.understandingaccounting.org/asc/220/40/#220-40-55-1) Pending content: yes Source downloaded (UTC): 2026-09-09T23:05:07.264Z to 2026-09-09T23:05:07.264Z Record version: sha256:e9fa159760d029f191cfad4b58e255ba8216afed07cc1d3882c618cdeff878af Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [220-40-65-1](https://asc.understandingaccounting.org/asc/220/40/#220-40-65-1)This Section is an integral part of the requirements of this Subtopic. This Section provides additional guidance and illustrations of the disaggregation of income statement expenses and other disclosures required by paragraphs [220-40-50-1 through 50-36](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-1) . The illustrations are intended as examples only and do not represent a required format for the disclosures. Furthermore, there may be incremental disclosure guidance otherwise applicable to an item or amount under other generally accepted accounting principles, which has not been illustrated in this Section. Paragraphs [220-40-50-6](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-6), [220-40-50-21 through 50-22](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-21) , [220-40-50-26](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-26), [220-40-50-28](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-28), and [220-40-50-30 through 50-33](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-30) require that an entity provide certain disclosures in a tabular format disclosure. #### Implementation Guidance ##### [220-40-55-2](https://asc.understandingaccounting.org/asc/220/40/#220-40-55-2) Pending content: yes Source downloaded (UTC): 2026-09-09T23:05:07.264Z to 2026-09-09T23:05:07.264Z Record version: sha256:914a2e2c0865a9132d47140d925088f7cdf2bda8076fbb05ba58c4786789bf26 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [220-40-65-1](https://asc.understandingaccounting.org/asc/220/40/#220-40-65-1)Application of the guidance in this Subtopic might cause an entity to pursue a degree of detail in recordkeeping and computations that could be burdensome as well as unnecessary to produce a reasonable approximation of the results. Accordingly, an entity may use estimates or other methods that produce a reasonable approximation of the amounts required to be disclosed by this Subtopic. #### Illustrations ##### [220-40-55-3](https://asc.understandingaccounting.org/asc/220/40/#220-40-55-3) Pending content: yes Source downloaded (UTC): 2026-09-09T23:05:07.264Z to 2026-09-09T23:05:07.264Z Record version: sha256:cda4d20bb2635c749400ee2137ecd3bbc3b7b6798c3a5a943e546c24c6bfe057 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [220-40-65-1](https://asc.understandingaccounting.org/asc/220/40/#220-40-65-1)This Example illustrates one type of tabular format disclosure that an entity could use to disclose disaggregated expense amounts in accordance with paragraphs [220-40-50-1 through 50-34](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-1) . This Example also illustrates the disclosure of selling expenses in accordance with paragraphs [220-40-50-35 through 50-36](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-35) . ##### [220-40-55-4](https://asc.understandingaccounting.org/asc/220/40/#220-40-55-4) Pending content: yes Source downloaded (UTC): 2026-09-09T23:05:07.264Z to 2026-09-09T23:05:07.264Z Record version: sha256:f6aaba8c13c73d81dbeb732008971ecd0268cadbed046b09de66215547c06686 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [220-40-65-1](https://asc.understandingaccounting.org/asc/220/40/#220-40-65-1)For the year ended December 31, 20X4, Entity X, which is a manufacturer with significant service operations, presents the following comparative income statement. - ![](https://asc.understandingaccounting.org/asc-img/GUID-63637395-418C-414D-B9D2-827AEBF0AE5C-low.gif) "Entity X Consolidated Income Statement For the Years Ended December 31, 20X4, 20X3, and 20X2" 20X4 20X3 20X2 Revenues: Products " $82,144 " " $79,137 " " $75,180 " Services "26,132" "23,146" "21,989" Total revenues " 108,276 " " 102,283 " " 97,169 " Operating expenses: Cost of products sold "63,456" "60,898" "57,244" Cost of services " 10,496 " " 9,568 " "8,898" "Selling, general, and administrative" " 20,849 " " 18,871 " "18,116" Total operating expenses " 94,801 " " 89,337 " " 84,258 " Operating income " 13,475 " " 12,946 " " 12,911 " Interest expense "4,971" "4,213" "4,297" Income before income taxes " 8,504 " " 8,733 " " 8,614 " Income tax expense "1,786" "1,834" "1,809" Net income " $6,718 " " $6,899 " " $6,805 " ##### [220-40-55-5](https://asc.understandingaccounting.org/asc/220/40/#220-40-55-5) Pending content: yes Source downloaded (UTC): 2026-09-09T23:05:07.264Z to 2026-09-09T23:05:07.264Z Record version: sha256:cadd5fba24e753f93ad66cbdb9f54362c768d9797c4f8ee3682c3287301f75ee Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [220-40-65-1](https://asc.understandingaccounting.org/asc/220/40/#220-40-65-1)Entity X provides a disclosure that disaggregates the cost of products sold; cost of services; and selling, general, and administrative expense captions into the categories listed in paragraph [220-40-50-6](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-6). Those expense captions were identified as relevant expense captions because those captions contain one or more of the expense categories listed in paragraph [220-40-50-6](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-6). Even though Entity X presents other expense captions on the face of its consolidated income statement, such as interest expense and income tax expense, those expense captions do not contain any of the expense categories listed in paragraph [220-40-50-6](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-6) (including those described in paragraphs [220-40-50-10 through 50-11](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-10) ); therefore, those expense captions do not need to be disaggregated. ##### [220-40-55-6](https://asc.understandingaccounting.org/asc/220/40/#220-40-55-6) Pending content: yes Source downloaded (UTC): 2026-09-09T23:05:07.264Z to 2026-09-09T23:05:07.264Z Record version: sha256:b060e291b19db2e1f9f9bcfd65ca059282d7c57f3cecc0e5940e3ade060dbba7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [220-40-65-1](https://asc.understandingaccounting.org/asc/220/40/#220-40-65-1)Because cost of products sold contains amounts related to inventory within the scope of Topic 330, Entity X may elect to disclose the amounts under a cost-incurred basis or expense-incurred basis. In this Example, Entity X chooses to disclose the disaggregation of cost of products sold on a cost-incurred basis (that is, the amounts disclosed include costs incurred that were capitalized to inventory during the current reporting period and costs incurred that were directly expensed during the current reporting period) in accordance with paragraph [220-40-50-31(a)](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-31). Because Entity X discloses the required expense categories using a cost-incurred basis, the entity discloses the changes in inventories caption and the other adjustments and reconciling items caption in accordance with paragraphs [220-40-50-32 through 50-33](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-32) . In accordance with paragraph [220-40-50-34](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-34), Entity X qualitatively describes the nature of amounts included in other adjustments and reconciling items. If Entity X had instead disclosed the required expense categories on an expense-incurred basis (that is, the amounts disclosed comprise expense amounts related to the derecognition of inventory that was previously capitalized in accordance with Topic 330 and any costs incurred that were directly expensed during the current reporting period) in accordance with paragraph [220-40-50-31(b)](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-31), then the changes in inventories caption and the other adjustments and reconciling items caption would not be necessary in the disaggregation disclosure. ##### [220-40-55-7](https://asc.understandingaccounting.org/asc/220/40/#220-40-55-7) Pending content: yes Source downloaded (UTC): 2026-09-09T23:05:07.264Z to 2026-09-09T23:05:07.264Z Record version: sha256:bd9a2305dd3065474545956a9aa4544f9d8c7242b686af86b140fd2937e348da Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [220-40-65-1](https://asc.understandingaccounting.org/asc/220/40/#220-40-65-1)Entity X also recognizes [impairment](https://asc.understandingaccounting.org/glossary/i/#impairment "Impairment is the condition that exists when the carrying amount of a long-lived asset (asset group) exceeds its fair value.") of property, plant, and equipment classified as held and used in selling, general, and administrative expenses and, therefore, includes that impairment as a separate category in the tabular format disclosure in accordance with paragraph [220-40-50-21(c)](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-21). ##### [220-40-55-8](https://asc.understandingaccounting.org/asc/220/40/#220-40-55-8) Pending content: yes Source downloaded (UTC): 2026-09-09T23:05:07.264Z to 2026-09-09T23:05:07.264Z Record version: sha256:6f656116f26e82121d717cc2d66f9385753762847876c1ec8cda826e1414fb9c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [220-40-65-1](https://asc.understandingaccounting.org/asc/220/40/#220-40-65-1)Entity X recognizes expenses associated with [warranty](https://asc.understandingaccounting.org/glossary/w/#warranty "A guarantee for which the underlying is related to the performance (regarding function, not price) of nonfinancial assets that are owned by the guaranteed party. The obligation may be incurred in connection with the sale of goods or services; if so, it may require further performance by the seller after the sale has taken place.") accruals entirely within cost of products sold and, therefore, includes warranty expense as a separate category in accordance with paragraph [220-40-50-22(k)](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-22). ##### [220-40-55-9](https://asc.understandingaccounting.org/asc/220/40/#220-40-55-9) Pending content: yes Source downloaded (UTC): 2026-09-09T23:05:07.264Z to 2026-09-09T23:05:07.264Z Record version: sha256:505e058869c22c05e2a7f2e88918e3188e46f2ca558ca901ef0c007f9cc12084 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [220-40-65-1](https://asc.understandingaccounting.org/asc/220/40/#220-40-65-1)Entity X recognizes [operating lease](https://asc.understandingaccounting.org/glossary/o/#operating-lease "From the perspective of a lessee, any lease other than a finance lease. From the perspective of a lessor, any lease other than a sales-type lease or a direct financing lease.") costs in both cost of services and selling, general, and administrative expenses. Therefore, in accordance with paragraph [220-40-50-22](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-22), Entity X is not required to separately disclose the amounts of cost of services and selling, general, and administrative expenses that are attributable to operating lease cost. Instead, those expenses are included in the amount for other items for each relevant expense caption in accordance with paragraph [220-40-50-30](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-30). ##### [220-40-55-10](https://asc.understandingaccounting.org/asc/220/40/#220-40-55-10) Pending content: yes Source downloaded (UTC): 2026-09-09T23:05:07.264Z to 2026-09-09T23:05:07.264Z Record version: sha256:bf9ab95d115ff9093fceff325d7485fa3bad3761b196f6705fa0797f726e0150 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [220-40-65-1](https://asc.understandingaccounting.org/asc/220/40/#220-40-65-1)Entity X recognizes amounts related to the initial recognition and subsequent measurement of a liability for an environmental obligation in cost of products sold (see Subtopic 410-30 on asset retirement and environmental obligations). In accordance with paragraph [220-40-50-16](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-16), Entity X is not required to disaggregate that amount into the expense categories listed in paragraph [220-40-50-6](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-6). Instead, that expense is included in the amount for other items in accordance with paragraph [220-40-50-30](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-30). ##### [220-40-55-11](https://asc.understandingaccounting.org/asc/220/40/#220-40-55-11) Pending content: yes Source downloaded (UTC): 2026-09-09T23:05:07.264Z to 2026-09-09T23:05:07.264Z Record version: sha256:25a0a13206f64aa5ae727c23b9a988c32dea27c401855ad8696e7fcd54152200 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [220-40-65-1](https://asc.understandingaccounting.org/asc/220/40/#220-40-65-1)Entity X provides the following disclosure. - ![](https://asc.understandingaccounting.org/asc-img/GUID-D773165C-2E13-4315-AA98-3F4F6E2A8BC4-low.gif) Disaggregation of Relevant Expense Captions Cost of products sold Cost of products sold 20X4 20X3 20X2 Purchases of inventory " $20,213 " " $19,199 " " $16,319 " Employee compensation "17,578" "16,539" "14,078" Depreciation " 10,190 " " 9,989 " " 9,650 " Intangible asset amortization "3,914" "4,050" "3,929" Warranty expense " 4,394 " " 3,952 " " 3,894 " Other cost of products sold (a) "7,552" "7,606" "7,993" Changes in inventories 157 (861) 843 Other adjustments and reconciling items (b) (542) 424 538 Total cost of products sold " $63,456 " " $60,898 " " $57,244 " TRUE TRUE TRUE (a) "Other cost of products sold consists primarily of amounts paid to carriers for outbound freight services related to contract fulfillment and amounts related to the measurement of a liability for an environmental obligation for the years ended December 31, 20X4, 20X3, and 20X2. Year ended December 31, 20X4, also includes inventory amounts recognized as part of a business combination." (b) "Other adjustments and reconciling items consist of reconciling adjustments attributable to differences in the foreign exchange rates used to translate beginning inventory, ending inventory, and costs incurred from various functional currencies into the reporting currency for the years ended December 31, 20X4, 20X3, and 20X2. " Cost of services Cost of services Employee compensation " $6,598 " " $5,654 " " $4,354 " Depreciation 763 765 742 Intangible asset amortization 642 670 650 Other cost of services (c) "2,493" "2,479" "3,152" Total cost of services " $10,496 " " $9,568 " " $8,898 " (c) "Other cost of services consists primarily of operating lease and travel expenses for the years ended December 31, 20X4, 20X3, and 20X2." "Selling, general, and administrative" "Selling, general, and administrative (SG&A)" Employee compensation " $13,242 " " $11,379 " " $10,764 " Depreciation " 1,454 " " 1,755 " " 1,737 " "Property, plant, and equipment impairment" 412 - - Intangible asset amortization 523 596 - Other SG&A (d) "5,218" "5,141" "5,615" Total SG&A " $20,849 " " $18,871 " " $18,116 " (d) "Other SG&A consists primarily of professional services fees and operating lease expense for the years ended December 31, 20X4, 20X3, and 20X2." ##### [220-40-55-12](https://asc.understandingaccounting.org/asc/220/40/#220-40-55-12) Pending content: yes Source downloaded (UTC): 2026-09-09T23:05:07.264Z to 2026-09-09T23:05:07.264Z Record version: sha256:b7fc62cad177d043795cbb5c3d1f47faddbd697a881dcdeefc344633dd43d10c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [220-40-65-1](https://asc.understandingaccounting.org/asc/220/40/#220-40-65-1)In addition to the tabular format disclosure illustrated in paragraph [220-40-55-11](https://asc.understandingaccounting.org/asc/220/40/#220-40-55-11), Entity X also must disclose its selling expenses and how it defines selling expenses in accordance with paragraphs [220-40-50-35 through 50-36](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-35) . - _Selling Expenses_ - During the years ended December 31, 20X4, 20X3, and 20X2, selling expenses were $13,425, $12,123, and $11,585, respectively. The entity’s selling expenses include those expenses related to marketing and promotional activities and client relationship management. ##### [220-40-55-13](https://asc.understandingaccounting.org/asc/220/40/#220-40-55-13) Pending content: yes Source downloaded (UTC): 2026-09-09T23:05:07.264Z to 2026-09-09T23:05:07.264Z Record version: sha256:f053f74039c010f36a6ef11b2f121ca4ecc96bb7ee62c9e1cd821ec65105ce6d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [220-40-65-1](https://asc.understandingaccounting.org/asc/220/40/#220-40-65-1)This Example illustrates one type of tabular format disclosure that an entity could use to disclose disaggregated expense amounts in accordance with paragraphs [220-40-50-1 through 50-34](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-1) . This Example also illustrates the disclosure of selling expenses in accordance with paragraphs [220-40-50-35 through 50-36](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-35) . ##### [220-40-55-14](https://asc.understandingaccounting.org/asc/220/40/#220-40-55-14) Pending content: yes Source downloaded (UTC): 2026-09-09T23:05:07.264Z to 2026-09-09T23:05:07.264Z Record version: sha256:a976a0ef2839d8f237ff0d332726834bbcb450b4bf84378b62af08bd3861289a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [220-40-65-1](https://asc.understandingaccounting.org/asc/220/40/#220-40-65-1)For the year ended December 31, 20X4, Entity X, which is a services provider, presents the following comparative income statement. - ![](https://asc.understandingaccounting.org/asc-img/GUID-D01A4FDB-0922-4D2F-ACC8-1C4E155B73D3-low.gif) "Entity X Consolidated Income Statement For the Years Ended December 31, 20X4, 20X3, and 20X2" 20X4 20X3 20X2 Revenues " $737,132 " " $710,146 " " $694,180 " Cost of sales (exclusive of depreciation and amortization shown separately below) "140,055" "170,435" "145,778" Depreciation and amortization related to cost of sales " 31,578 " " 26,178 " "23,628" "Selling, general, and administrative expenses" " 497,962 " " 458,215 " " 471,626 " Research and development expenses " 57,235 " " 52,174 " "48,898" Operating income " 10,302 " " 3,144 " " 4,250 " Interest expense "3,145" "2,665" "2,297" Income before income taxes " 7,157 " 479 " 1,953 " Income tax expense "1,503" 101 410 Net income " $5,654 " $378 " $1,543 " ##### [220-40-55-15](https://asc.understandingaccounting.org/asc/220/40/#220-40-55-15) Pending content: yes Source downloaded (UTC): 2026-09-09T23:05:07.264Z to 2026-09-09T23:05:07.264Z Record version: sha256:be8a8d78e3f670777f230c9c6e567cd607b9586c22a30cb625a49eb8caecc333 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [220-40-65-1](https://asc.understandingaccounting.org/asc/220/40/#220-40-65-1)Entity X provides a disclosure that disaggregates the cost of sales; depreciation and amortization; selling, general, and administrative expenses; and research and development expenses captions into the categories listed in paragraph [220-40-50-6](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-6). Those expense captions were identified as relevant expense captions because those captions contain one or more of the expense categories listed in paragraph [220-40-50-6](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-6). Even though Entity X presents other expense captions on the face of its consolidated income statement, such as interest expense and income tax expense, those expense captions do not contain any of the expense categories listed in paragraph [220-40-50-6](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-6) (including those described in paragraphs [220-40-50-10 through 50-11](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-10) ); therefore, those expense captions do not need to be disaggregated. ##### [220-40-55-16](https://asc.understandingaccounting.org/asc/220/40/#220-40-55-16) Pending content: yes Source downloaded (UTC): 2026-09-09T23:05:07.264Z to 2026-09-09T23:05:07.264Z Record version: sha256:e4c331c8c80f164f392c80df50d9d882ed69db1a4a5e4b68e6f43ba8477f17d9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [220-40-65-1](https://asc.understandingaccounting.org/asc/220/40/#220-40-65-1)Entity X also recognizes [one-time employee termination benefits](https://asc.understandingaccounting.org/glossary/o/#one-time-employee-termination-benefits "Benefits provided to current employees that are involuntarily terminated under the terms of a one-time benefit arrangement.") in cost of sales; selling, general, and administrative expenses; and research and development expenses and, therefore, includes this amount as a separate category in the tabular format disclosure in accordance with paragraph [220-40-50-21](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-21). Paragraph [220-40-50-21(e)](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-21) requires that an entity disclose the amount of each major type of cost associated with an exit or disposal activity (for example, one-time employee termination benefits) that is recognized in each relevant expense caption in the same tabular format in which the disclosures required by paragraph [220-40-50-6](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-6) are provided. Because one-time employee termination benefits are a form of employee compensation, Entity X discloses that its employee compensation category excludes one-time employee termination benefits because one-time employee termination benefits are disclosed as a separate category. ##### [220-40-55-17](https://asc.understandingaccounting.org/asc/220/40/#220-40-55-17) Pending content: yes Source downloaded (UTC): 2026-09-09T23:05:07.264Z to 2026-09-09T23:05:07.264Z Record version: sha256:4994ee6454d479df2701d69375937ac29e66c5e645bb3ef1e232a7f7e98c74ff Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [220-40-65-1](https://asc.understandingaccounting.org/asc/220/40/#220-40-65-1)Entity X has a funded research and development cost-sharing arrangement with a strategic partner. Entity X recognizes an expense reimbursement from the strategic partner in research and development expenses and, in accordance with paragraph [220-40-50-26(a)](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-26), elects to separately disclose the amount of that expense reimbursement. If Entity X had elected to present a relevant expense caption net of an expense reimbursement from another entity, it would have been required to disclose the amount of the expense categories that are included in each relevant expense caption. Additionally, in accordance with paragraph [220-40-50-29](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-29), Entity X qualitatively describes the expense categories to which the reimbursement relates. ##### [220-40-55-18](https://asc.understandingaccounting.org/asc/220/40/#220-40-55-18) Pending content: yes Source downloaded (UTC): 2026-09-09T23:05:07.264Z to 2026-09-09T23:05:07.264Z Record version: sha256:9c5a05a8ffcddadf76c5f318095b5563e68b7c3054eb727b39de34d640c7e679 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [220-40-65-1](https://asc.understandingaccounting.org/asc/220/40/#220-40-65-1)Entity X provides the following disclosure. - ![](https://asc.understandingaccounting.org/asc-img/GUID-AC756D2C-3F46-42A3-A973-E428105C3372-low.gif) Disaggregation of Relevant Expense Captions Cost of sales Cost of sales 20X4 20X3 20X2 Employee compensation (exclusive of one-time employee termination benefits) " $86,336 " " $83,903 " " $100,009 " One-time employee termination benefits " 7,434 " " 39,298 " - Other cost of sales (a) "46,285" "47,234" "45,769" Total cost of sales " $140,055 " " $170,435 " " $145,778 " (a) "Other cost of sales consist primarily of subcontractor costs and travel expenses for the years ended December 31, 20X4, 20X3, and 20X2." Depreciation and amortization related to cost of sales Depreciation and amortization related to cost of sales Depreciation " $19,126 " " $17,984 " " $17,893 " Intangible asset amortization " 12,452 " " 8,194 " " 5,735 " Total depreciation and amortization related to cost of sales " $31,578 " " $26,178 " " $23,628 " "Selling, general, and administrative expenses" "Selling, general, and administrative expenses (SG&A)" Employee compensation (exclusive of one-time employee termination benefits) " $278,859 " " $238,272 " " $301,841 " One-time employee termination benefits " 19,243 " " 60,635 " - Other SG&A (b) "199,860" "159,308" "169,785" Total SG&A " $497,962 " " $458,215 " " $471,626 " (b) "Other SG&A consists primarily of professional services fees and the costs paid to third parties for printing, publications, and advertising for the years ended December 31, 20X4, 20X3, and 20X2." Research and development expenses Research and development expenses (R&D) Employee compensation (exclusive of one-time employee termination benefits) " $46,242 " " $41,379 " " $40,764 " One-time employee termination benefits " 1,454 " " 1,855 " - Other R&D (c) "17,836" "16,845" "15,890" Cost reimbursements (d) "(8,297)" "(7,905)" "(7,756)" Total R&D " $57,235 " " $52,174 " " $48,898 " (c) "Other R&D consists primarily of payments to third parties for professional services and licenses of intellectual property for the years ended December 31, 20X4, 20X3, and 20X2." (d) "Cost reimbursements consist of payments from a strategic partner for employee compensation and materials costs related to R&D incurred as part of a funded research and development arrangement for the years ended December 31, 20X4, 20X3, and 20X2." ##### [220-40-55-19](https://asc.understandingaccounting.org/asc/220/40/#220-40-55-19) Pending content: yes Source downloaded (UTC): 2026-09-09T23:05:07.264Z to 2026-09-09T23:05:07.264Z Record version: sha256:b0084c51691c657a8006ef105df4167f0209b73c987d26ee498143c562f5a23d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [220-40-65-1](https://asc.understandingaccounting.org/asc/220/40/#220-40-65-1)In addition to the tabular format disclosure illustrated in paragraph [220-40-55-18](https://asc.understandingaccounting.org/asc/220/40/#220-40-55-18), Entity X also must disclose its selling expenses and how it defines selling expenses in accordance with paragraphs [220-40-50-35 through 50-36](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-35) . - _Selling Expenses_ - During the years ended December 31, 20X4, 20X3, and 20X2, selling expenses were $224,536, $223,493, and $231,892, respectively. The entity’s selling expenses include those expenses related to advertising and certain customer acquisition-related costs. ##### [220-40-55-20](https://asc.understandingaccounting.org/asc/220/40/#220-40-55-20) Pending content: yes Source downloaded (UTC): 2026-09-09T23:05:07.264Z to 2026-09-09T23:05:07.264Z Record version: sha256:724ee6f340c6cce66e2ab0048b7b92ac0b5b05c60a1d3a0c5b0f2eef4a37f242 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [220-40-65-1](https://asc.understandingaccounting.org/asc/220/40/#220-40-65-1)This Example illustrates one type of tabular format disclosure that an entity could use to disclose disaggregated expense amounts in accordance with paragraphs [220-40-50-1 through 50-34](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-1) . This Example also illustrates the disclosure of selling expenses in accordance with paragraphs [220-40-50-35 through 50-36](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-35) . ##### [220-40-55-21](https://asc.understandingaccounting.org/asc/220/40/#220-40-55-21) Pending content: yes Source downloaded (UTC): 2026-09-09T23:05:07.264Z to 2026-09-09T23:05:07.264Z Record version: sha256:578ec8d7bebbf3dce5c4b8c6e7edefd29a6dc8e8ae7123fb8e30261fa497b83b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [220-40-65-1](https://asc.understandingaccounting.org/asc/220/40/#220-40-65-1)For the year ended December 31, 20X4, Entity X, which is a bank, presents the following comparative income statement. - ![](https://asc.understandingaccounting.org/asc-img/GUID-76A1E295-AE67-4382-8C00-4C9E4D855958-low.gif) "Entity X Consolidated Income Statement For the Years Ended December 31, 20X4, 20X3, and 20X2" 20X4 20X3 20X2 Interest income Loans " $2,795,052 " " $2,142,873 " " $2,072,997 " Investment securities " 628,887 " " 442,550 " " 465,842 " Other "209,629" "116,461" "79,193" Total interest income "3,633,568" "2,701,884" "2,618,032" Interest expense Deposits " 302,797 " " 30,280 " " 151,399 " Borrowed funds "279,505" "83,852" "167,703" Total interest expense "582,302" "114,132" "319,102" Net interest income "3,051,266" "2,587,752" "2,298,930" Provision for (recapture of) credit losses " 116,461 " " (186,337)" " 372,674 " Net interest income after provision for (recapture of) credit losses " 2,934,805 " " 2,774,089 " " 1,926,256 " Noninterest income Service charges on deposit accounts "201,702" "171,062" "151,969" Other service charges and fees "282,383" "239,487" "212,757" Total noninterest income "484,085" "410,549" "364,726" Noninterest expense Salaries and employee benefits "1,464,608" "1,176,183" "1,365,443" Occupancy and depreciation "376,587" "279,875" "349,679" Data processing "166,111" "146,308" "161,046" Advertising and marketing "56,876" "30,555" "28,192" Professional fees "73,230" "61,459" "74,473" Other "30,513" "21,399" "24,804" Total noninterest expense "2,167,925" "1,715,779" "2,003,637" Income before income taxes " 1,250,965 " " 1,468,859 " " 287,345 " Income tax expense "262,703" "308,460" "60,342" Net income " $988,262 " " $1,160,399 " " $227,003 " ##### [220-40-55-22](https://asc.understandingaccounting.org/asc/220/40/#220-40-55-22) Pending content: yes Source downloaded (UTC): 2026-09-09T23:05:07.264Z to 2026-09-09T23:05:07.264Z Record version: sha256:05caa4c4a6b69e7d7e007f9bbb2692be9532d6f753fea691781eccc49af5efb3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [220-40-65-1](https://asc.understandingaccounting.org/asc/220/40/#220-40-65-1)Entity X provides a disclosure that disaggregates the occupancy and depreciation expense and other expense captions into the categories listed in paragraph [220-40-50-6](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-6). Those expense captions were identified as relevant expense captions because those captions contain one or more of the expense categories listed in paragraph [220-40-50-6](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-6). In this Example, even though Entity X also presents separate expense captions on the face of its consolidated income statement for interest expense, provision for (recapture of) credit losses, data processing, advertising and marketing, professional fees, and income tax expense, those expense captions do not contain any of the expense categories listed in paragraph [220-40-50-6](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-6) (including those described in paragraphs [220-40-50-10 through 50-11](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-10) ); therefore, those expense captions do not need to be further disaggregated. Entity X applies the practical expedient for employee compensation described in paragraph [220-40-50-20](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-20) and elects to not repeat the amount presented on the face of the income statement in the notes to financial statements. ##### [220-40-55-23](https://asc.understandingaccounting.org/asc/220/40/#220-40-55-23) Pending content: yes Source downloaded (UTC): 2026-09-09T23:05:07.264Z to 2026-09-09T23:05:07.264Z Record version: sha256:7f5f3c57e2ad76ee61b6362b3fc715ce6db15f4ca1d993fac7f3dce60bae222d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [220-40-65-1](https://asc.understandingaccounting.org/asc/220/40/#220-40-65-1)Entity X recognizes operating lease cost entirely within occupancy and depreciation expense and, therefore, includes operating lease cost as a separate category in accordance with paragraph [220-40-50-22(p)](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-22). ##### [220-40-55-24](https://asc.understandingaccounting.org/asc/220/40/#220-40-55-24) Pending content: yes Source downloaded (UTC): 2026-09-09T23:05:07.264Z to 2026-09-09T23:05:07.264Z Record version: sha256:68e5dcb077b9980703a6896ea1182ebcb6d98c4c27fdb6be2b244c31aef806a9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [220-40-65-1](https://asc.understandingaccounting.org/asc/220/40/#220-40-65-1)Entity X provides the following disclosure. - ![](https://asc.understandingaccounting.org/asc-img/GUID-BDA8B9A8-54FB-490D-8474-B5F2D8177A5E-low.gif) Disaggregation of Relevant Expense Captions Occupancy and depreciation expense Occupancy and depreciation expense 20X4 20X3 20X2 Depreciation " $164,232 " " $146,403 " " $145,907 " Operating lease expense " 152,445 " " 103,239 " " 149,842 " Other occupancy expenses (a) "59,910" "30,233" "53,930" Total occupancy and depreciation expense " $376,587 " " $279,875 " " $349,679 " (a) "Other occupancy expenses consist primarily of repair and maintenance expense for the years ended December 31, 20X4, 20X3, and 20X2." Other Other Intangible asset amortization " $13,139 " " $10,980 " " $10,068 " Other (b) "17,374" "10,419" "14,736" Total other " $30,513 " " $21,399 " " $24,804 " (b) "Other consists primarily of regulatory licensing fees and charitable contributions for the years ended December 31, 20X4, 20X3, and 20X2." ##### [220-40-55-25](https://asc.understandingaccounting.org/asc/220/40/#220-40-55-25) Pending content: yes Source downloaded (UTC): 2026-09-09T23:05:07.264Z to 2026-09-09T23:05:07.264Z Record version: sha256:c6502600d06566031cec7832b3f0c175601b042ae438b665a15c652e52db4b5c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [220-40-65-1](https://asc.understandingaccounting.org/asc/220/40/#220-40-65-1)In addition to the tabular format disclosure illustrated in paragraph [220-40-55-24](https://asc.understandingaccounting.org/asc/220/40/#220-40-55-24), Entity X also must disclose its selling expenses and how it defines selling expenses in accordance with paragraphs [220-40-50-35 through 50-36](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-35) . - _Selling Expenses_ - During the years ended December 31, 20X4, 20X3, and 20X2, the entity defined selling expenses to be the same as its advertising and marketing expenses, which are presented on the face of its consolidated income statement. The entity’s advertising and marketing expenses include costs incurred for advertising, market research, and business development.