Question

Which of the following should be disclosed in the Summary of Significant Accounting Policies?

1) rent expense amount
2) maturity dates of long-term debt
3) composition of plant assets
4) methods of amortizing intangibles

Answer 1

The Summary of Significant Accounting Policies should disclose methods of amortizing intangibles, as they represent a significant accounting policy, while rent expense amounts, maturity dates of long-term debt, and composition of plant assets are not usually included in this summary.

Step-by-step explanation:

The Summary of Significant Accounting Policies is a section included in an entity's financial statements that explain the key accounting rules applied to the financial statements. It is an essential part of the notes to the financial statements and helps users understand how the financial information has been prepared. Out of the options provided, the correct disclosures for this section would include:

• Methods of amortizing intangibles: This involves explaining the approach taken to amortize intangible assets over their useful lives. This is a significant policy as it affects the recognition of expenses and the carrying value of intangible assets.

Items such as the rent expense amount or maturity dates of long-term debt are not typically disclosed in the Summary of Significant Accounting Policies, as these are specific item disclosures. The composition of plant assets is similarly detailed elsewhere, usually in the fixed assets or property, plant, and equipment note.