Tagging the primary statements - Step 3 - Signage
The third step in tagging a primary statement is to ensure the facts will be interpreted correctly in the XBRL from an accounting balance perspective (DR/CR).
There is no universally adopted signage convention when preparing financial statements. For example, a debit Cost of sales could be shown either as a negative or a positive value in the accounts. A human reader can easily adapt to both scenarios and correctly interpret the fact as a debit, but signage needs to be explicitly set in the XBRL so that computers interpret the fact correctly without any ambiguity.
In XBRL, the general rule is that all facts must be reported as a positive number. Therefore both Revenue and Cost of sales must be positive in the XBRL to be interpreted as credit and debit respectively. The exception to his rule is for, facts that could be both positive or negative - such as Gross profit/(loss). In this case, you should use the tag's label to understand how a positive and a negative number will be determined (positive - profit; negative - loss).
Accounting balance view
Report Authority simplifies this process by providing an Accounting Balance view that will highlight each fact using a different colour to indicate its interpreted accounting balance in the XBRL.
This view can be activated by clicking the View -> Accounting Balance:
Notice in the icon, there is a "T-Account" with the left (debit) being green, and the right (credit) being blue. Tagged facts will be highlighted as follows:
- Green = Debit
- Blue = Credit
In the example above, Cost of sales is presented as a negative in the primary statement but should be reported as a positive value in the XBRL. For this reason, by default, it will be interpreted as credit which is incorrect. To fix this issue, draw a selection across both the current and previous period and click the "Reverse signage convention" checkbox in the Tag Attributes section of the XBRL Tags ribbon:
Notice below the "Reverse signage convention" checkbox which is now checked - the software confirms both Cost of sales tags will be interpreted as Debit. They will also be highlighted green in the report:
Signage is usually a tricky aspect of XBRL tagging, however using Authority Software's Accounting Balance view, you can see at a glance and easily spot and correct errors (such as Finance costs which currently will be incorrectly interpreted as a credit in the screenshot above).
See this video for a more in-depth demonstration and discussion:
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