Sign Values in XBRL – Part 2: How to Apply the Sign Concepts to an Indirect Cash Flow Statement
Applying the correct sign to an indirect cash flow statement may be particularly confusing because the correct balance types for Net Income and Adjustments to Net Income are considered differently than the balance types for elements in the rest of the cash flow statement. The following information provides clarification.
In the figure below, the taxonomy used was created in such a way that the Adjustments to Net Income section uses some of the same elements that are used in the income statement. The instance document values in the Adjustments to Net Income section of the cash flow statement should be reported with an instance document balance that is consistent with its income statement balance. For example, Depreciation and Amortization should be reported as a debit because that is consistent with its income statement balance. Similarly, net earnings should be reported as a credit, consistent with its income statement balance. For the rest of the cash flow statement, the amounts should be reported based on their impact on cash (debits are inflows of cash, credits are outflows of cash).
Figure 5
Net earnings is a credit (consistent with its income statement concept) and is an addition to cash flows from operations. Noncash depreciation and amortization expense is a debit (consistent with its income statement concept) and is also an addition to cash flows from operations. We have a credit and a debit adding together, but this is the nature of the US-GAAP taxonomy and the indirect cash flow statement.
Except for line items above “Adjustments to reconcile net earnings to net cash provided by operating activities,” if the cash flow line item amount is negative (representing a use of cash) the value should be reported as a credit (or negative debit) in the instance document, and if the line item value is positive (representing a source of cash), the value should be reported as a debit (or a negative credit) in the instance document.
Line items above “Adjustments to reconcile net earnings to net cash provided by operating activities” are an exception to the pattern. For example, Net Income, which is a source and shown as a positive, should be reported as a credit (consistent with its Income Statement nature).
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