After the section “Summary of Significant Accounting Policies”, there will generally be a series of other notes. Some of these provide breakdowns and analyses of some of the individual line items reported on the balance sheet and income statement. Other notes provide additional disclosures, not shown on the financial statements themselves.
Accounting Changes
Any changes in accounting methods will be reflected in the financial statements, but this note serves to bring attention to these changes, explain the reason for them, and indicate the effect of the changes. If the changes are material, the financial statements for the prior period may have been restated to reflect the effects of the change and to facilitate comparison. In other cases, the change may have resulted in an entry to retained earnings, and this too should be disclosed.
Leases
A note on leases would disclose the amount of non-cancelable operating leases, renewal options, and future minimum lease payments under non-cancelable operating leases, showing the present value of these net minimum capital lease payments.
Transactions with Related Entities
This disclosure would identify each related entity or person, the type of relationship, the volume and effect of the transactions on the results for the period, and balances payable to, or receivable from related entities.
Pension Benefits
If the company has a pension plan, this note will be used to disclose information regarding the pension plan fund, how the plan is funded, and the assumptions used in determining the amount charged to expense for the period. This information may include the actuarial present value of benefit obligations, vested benefit obligations, accumulated benefit obligations, projected benefit obligations, plan assets at fair value, projected benefit obligations less than (in excess of) plan assets, unrecognized net gain, prior service cost not yet recognized in net periodic pension cost, unrecognized net obligation, and prepaid pension cost (pension liability) included in the balance sheet.