Question

Deferred taxes is a complicated issue and GAAP requires a significant amount of disclosures in the footnotes explaining the various pieces. List the required footnote disclosures under GAAP and also state where you found that list in the codification.

Answer 1

Footnotes to the financial statements refer to additional information that helps explain how a company arrived at its financial statement figures. They also help to explain any irregularities or perceived inconsistencies in year to year account methodologies. It functions as a supplement, providing clarity to those who require it without having the information placed in the body of the statement. Nevertheless, the information included in the footnotes is often important, and it may reveal underlying issues with a company's financial health.

• Footnotes to the financial statements allow additional information and clarification to items presented in the balance sheet, income statement, and cash flow statement.
• The footnotes present required disclosures, accounting methodologies used, any modifications to methodologies from previous reporting periods, and upcoming transactions that may affect future profitability.
• Footnotes are important for investors and other users of the financial statements as they may reveal issues with a company's financial health.

Footnotes to the financial statements serve as a way for a company to provide additional explanations for various portions of their financial statements. Footnotes to the financial statements thus report the details and additional information that is left out of the main financial statements such as the balance sheet, income statement, and cash flow statement.

This is done mainly for the sake of clarity because these notes can be quite long, and if they were included in the main text they would cloud the data reported in the financial statement. Using footnotes allows the general flow of a document to remain appropriate by providing a way for the reader to access additional information if they feel it is necessary. It allows an easily accessible place for complex definitions or calculations to be explained should a reader desire additional information.

It is important for analysts and investors to read the footnotes to the financial statements included in a company's interim and annual reports. These notes contain important information on items such as the accounting methodologies used for recording and reporting transactions, pension plan details, and stock option compensation information—all of which can have material effects on the bottom-line return that a shareholder can expect from an investment in a company. Footnotes also explain in detail why any irregular or unusual activities such as a one-time expense has occurred and what its impact may be on future profitability. These are also sometimes called explanatory notes

Please give the good feedback(Thumbup)