Wednesday, July 15. 2020
FASB Releases Q&A on the Application of the US GAAP Taxonomy for COVID-19 Pandemic and Relief Disclosures
The Q&A addresses the application of the US GAAP Taxonomy to disclosures in the following areas:
- Income taxes
- Payroll taxes
- Overall discussion of the effects of the pandemic
Generally, the current taxonomy contains elements appropriate for COVID-19 related disclosure. There are instances, however, where extension elements that are consistent with existing taxonomy elements are warranted.
COVID-19 Information in the Notes to Financial Statements: If the financial statements include a separate note on COVID-19, the taxonomy element “Unusual or Infrequent Items, or Both, Disclosure [Text Block]” is intended to be used for the note. However, the preferredLabel attribute (the preferred label) for the element should end with “COVID-19” to alert readers that the note relates to COVID-19.
CARES Act Disclosures
Income Taxes and Net Operating Losses: The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) has effects on the financial statements as related to the modifications of limitations on the deductibility of net operating losses, among other potential areas. Extension elements are intended to be used for disclosures of changes in tax laws from the CARES Act as related to this information. These extension elements are consistent with existing taxonomy elements (such as Income Taxes Receivable, Income Tax Expense (Benefit), and Continuing Operations, Adjustment of Deferred Tax (Asset) Liability). As with COVID-19 disclosure discussed above, preferred labels for these extension elements should end with “CARES Act.” As an example, an extension element for the tax receivable to disclose the effect of a carryback of net operating losses would have the preferred label “Income Taxes Receivable, Net Operating Loss, CARES Act.”
The Acceleration of Alternative Minimum Tax (AMT) Credits: Again, extension elements are intended to be used for disclosures of changes in tax laws from the CARES Act related to the acceleration of AMT credits. These elements are consistent with existing taxonomy elements (such as Income Taxes Receivable) and should have preferred labels that end with “CARES Act.” An example would be “Income Taxes Receivable, Alternative Minimum Tax, CARES Act.”
Depreciation of Qualified Improvement Property. Extension elements should be used for disclosures of changes in tax laws from the CARES Act related to the recognition of depreciation of qualified improvement property. Again, these extension elements are consistent with existing taxonomy elements (such as Income Taxes Receivable) with a preferred label for the extension element that ends with “CARES Act”. For example, such an element would be “Income Taxes Receivable, Qualified Improvement Property, CARES Act.”
Threshold Values Related to the Specific Provisions of CARES Act Relief Efforts. Disclosure of threshold values that simply reiterate the provisions of relief programs under the CARES Act (for example, the percentage of the loan that must be used for payroll to qualify under the Paycheck Protection Program [PPP]) do not need to be tagged because the information is not specific to the filer. This is consistent with question 146.16 of the SEC staff’s Compliance and Disclosure Interpretations—Interactive Data (last update: August 20, 2019), which provides examples of the types of monetary values, percentages, and numbers that the SEC staff has agreed are not within the purpose of the current interactive data requirements. As a result, this information does not need to be tagged separately to comply with Rules 405(d)(4)(i) and 405(e)(2)(i).
Deferred Payroll Taxes, Employee Retention Credits, and Deferred Pension Contributions. Extension elements should be used for disclosure of deferred payroll taxes, employee retention credits, and deferred pension contributions related to the CARES Act. Preferred labels for these elements should end with “CARES Act.” Any extension elements should be structured similar to other “CARES Act” elements. For example, an extension element for deferred employer share of payroll taxes would be “Social Security Tax, Employer, Deferral, CARES Act,” an extension element for employee retention credits would be “Employee Retention Credit, CARES Act,” and an extension element for deferred pension contributions would be “Defined Benefit Plan, Expected Future Employer Contributions, Current Fiscal Year, Deferral, CARES Act.”
Transactions from Lending Programs Under the CARES Act. Borrowers should disclose PPP loans and loans with other CARES Act credit facilities using taxonomy elements where appropriate. The amount of debt should be disclosed using line items currently in the taxonomy. Some possible elements that can be used for disclosures include “Debt Instrument, Face Amount,” “Proceeds from Lines of Credit,” “Repayments of Long-term Debt,” and “Repayments of Lines of Credit.” The element for the program from which the loan has been funded by should be created as an extension member on the “Debt Instrument [Axis]” or used with “Debt Instrument, Type [Extensible List].” Again, extension member elements should have preferred labels that end with “CARES Act,” such as “Paycheck Protection Program, CARES Act [Member]” and “Credit Facility, CARES Act [Member].”
Lenders should also disclose PPP loans and loans along with other CARES Act credit facilities using taxonomy elements where appropriate. Possible elements that can be used for disclosures of PPP loans and CARES Act credit facilities enabled by the lender include “Financing Receivable, before Allowance for Credit Loss,” “Financing Receivable, after Allowance for Credit Loss,” and “Payments for (Proceeds from) Loans and Leases.” Extension elements that can be used for disclosures that are commonly reported include but are not limited to “Financing Receivable, Number of Loans Authorized,” “Financing Receivable, Amount of Loans Authorized,” and “Financing Receivable, Amount of Loans Authorized.” One dimensional structure that may be appropriate is “Loans Insured or Guaranteed by Government Authorities [Axis].” Members included in that domain will depend on the source of the guarantee such as “Small Business Administration (SBA), CARES Act, Paycheck Protection Program [Member].”
Grants from Government Relief Programs Initiated in Response to COVID-19. The taxonomy has elements applicable in this case, such as “Grants Receivable,” “Grants Receivable, Current,” and “Grants Receivable, Noncurrent”. However, additional extension line items may be necessary to represent commonly reported disclosures, including “Proceeds from Government Assistance” for amounts received and “Government Assistance, Statement of Income or Comprehensive Income [Extensible List]” and “Government Assistance, Statement of Financial Position [Extensible List]” to report which line item in the financial statements in which the grant is included.
Disclosures may require a dimensional structure (all extension elements) for multiple types of government assistance. For instance, “Government Assistance [Axis],” “Government Assistance [Domain],” and “Government Assistance, CARES Act [Member]” may be appropriate extensions. If only one specific type of government assistance is received, “Government Assistance, [Extensible List]” may be extended to indicate the type of assistance.
In all cases, using appropriate preferred labels for any extension elements will enhance the comparability of the disclosures. Conforming to this structure will permit data consumers to search and interpret text using agreed-upon terms.