Interim Reporting
  • Financial reporting for periods less than one year.
  • Usually refers to quarterly reporting
  • Objective: provide more timely information
Two basic conceptual views of interim reporting
  • Discrete view--each interim period is a separate accounting period; same principles and procedures used for interim reporting as for annual reporting; no special accruals or deferrals.
  • Integral view--each interim period is a integral part of an annual period; annual expectations must be reflected in interim reports; special accruals and deferrals and allocations are utilized.
  • Integral view adopted by the profession.
Items recognized using the same methods as used in annual financial statements. (general rule)
  • Revenues
  • Cost of goods sold
    • gross profit method may be used to estimate cost of sales and ending inventory for interim periods.
    • Liquidation of LIFO base period inventories, if liquidated inventory is expected to be replaced by year-end,  then the inventory is charged to cost of sales at its estimated replacement cost
    • temporary declines in market value need not be recognized


Items needing exceptions to the general rule
  • Income taxes
    • (year-to-date income times estimated annual effective tax rate) - (Income tax expense recognized in earlier quarters)
  • Discontinued operations
    • recognized in the period incurred
  • Extraordinary items
    •   Recognize in the period incurred
    •   materiality based on expected annual results
  •  Change in accounting principle
    • Retrospective application. Cumulative effect on assets/liabilities recognized in the first period presented with offsetting adjustment to beginning retained earnings for that period.
    • Financial statements are adjusted for each interim periods' affect of the change.

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