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Keep your Debt Classification on Track

Financial executives are still deliberating on how FASB’s proposal on Debt Classification will eventually ease the elaborate reports on balance sheet’s current and noncurrent debt. This proposal aims to introduce new principles in Debt Accounting Standard 470 in order to simplify the considerations for classification and lessen the cost and complexity of preparation for auditing purpose.

Liabilities will now consider the rights and obligations of the entity as of the balance sheet date. This means that management might be facing a thorough shifting of liability arrangements between current and noncurrent, such as the samples given by FASB below:

  • Short-term debt that is refinanced after balance sheet date into long-term basis should still be classified as short-term. This is with respect to the consideration that subsequent refinancing is a condition that did not exist as of balance sheet date.
  • Entity should classify the instrument as noncurrent if its due to be settled more than one year or the entity has the contractual right to defer settlement for at least one year after the balance sheet date.

If you will support or question the changes of this  proposal  , comments are still welcome until May of this year. Though it will still be under discussion for sometime, management should start examining their liabilities and analysts should start considering such policy changes that might reflect on their reports.

While the rest are still contemplating, XBRLAnalyst already has a ready solution to track your debt classification with ease. With the use of its Historical Data feature,  you can control and classify debts that are periodically arranged. Let’s follow how we classified Cisco’s debt for six consecutive years:

  • Click the “Historical Data” button and search for the company you wanted to explore. In our example, we will be checking Cisco’s data for years 2011-2016.

  • Choose the financials/accounts with related periods of the historical data you wanted to retrieve. Here we will be classifying all Cisco’s debt-related accounts, both current and noncurrent.

  • “Unpivot Data” offers two options of result. By using it, you can get a table summary of Pivot Data and if not, you wll be provided with Raw Data where you can apply your own pivot structure.

 

  • Pivot Data

 

  • Raw Data

 

  • And lastly, your result can be modified in Excel where you can apply your preferred arrangement. In this template, we used the generated raw data in making our own pivot table and chart. In pivot chart, it is showing the portions and movements of each Cisco’s debt classification for the last six years.

 

XBRLAnalyst can flexibly adjust and adapt to any changes thru its advanced system designed to integrate financial or technological improvements even before they are implemented. So why do you have to wait if you can try it now for free?

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