Chapter 2 — Form and Content of Financial Information

2.4 Summarized Income Statement Information

Rule 10-01(b)(1) states, in part:

Summarized statement of comprehensive income information shall be given separately as to each subsidiary not consolidated [unconsolidated subsidiary] or 50 percent or less owned persons [equity method investees] or as to each group of such subsidiaries or fifty percent or less owned persons for which separate individual or group statements would otherwise be required for annual periods.

Accordingly, summarized income statement information is required in a footnote to the registrant’s financial statements in a quarterly report if both (1) the significance of the equity method investee exceeds 20 percent under either the income test or the investment test as prescribed in Rule 1-02(w) (see Section 3.1 for further discussion of the significance tests and thresholds applied) and (2) quarterly financial information would be required if the equity method investee were a registrant. As noted in Rule 10-01(b)(1) and in paragraph 2420.6 of the FRM, summarized income statement information need not be furnished for any equity method investee that would not be required, under Exchange Act Rule 13a-13 or 15d-13, to file quarterly financial information with the SEC if it were a registrant. For example, certain investment companies, foreign private issuers, asset-backed issuers, mutual life insurance companies, and certain mining companies do not file quarterly reports, and thus a registrant is not required to provide summarized financial information in its quarterly report for equity method investees that meet these criteria.

When preparing interim financial statements, registrants should also consider ASC 323-10-50-3(c) and ASC 270-10-50-1(h) in determining whether significant equity method investees are material (and thus should be disclosed). For further discussion, see Section 4.3.

Rule 1-02(bb)(ii) indicates that if Rule 10-01(b)(1) requires summarized financial information to be included in interim financial statements, registrants must disclose the following income statement line items:

“Net sales or gross revenues.”
“[G]ross profit (or, alternatively, costs and expenses applicable to net sales or gross revenues).”
“[I]ncome or loss from continuing operations.”
“[N]et income or loss.”
“[N]et income or loss attributable to the entity.”

In accordance with paragraph 2420.8 of the FRM, if summarized financial information is required, a registrant should provide year-to-date information for both the current interim period and the comparative prior-year interim period. Summarized financial data for interim periods is only required for investees that are significant.

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This SEC Reporting Interpretations manual provides comprehensive guidance; however, the manual does not address all possible fact patterns, and the guidance is subject to change. Consult a Deloitte & Touche LLP professional regarding your specific issues and questions.