DISE Disclosure Requirements Explained: ASU 2024-03 Reference Guide
DISE, the Disaggregation of Income Statement Expenses standard, is the most significant change to expense footnote disclosure in US GAAP in decades. Issued by the FASB on November 4, 2024 as ASU 2024-03, it requires every public business entity to break out five specified natural expense categories inside a new tabular footnote, without touching a single line on the face of the income statement.
If your entity files with the SEC, or if your financials are pulled into another registrant's filing, this standard almost certainly applies to you. PwC estimates that "nearly all PBEs will be required to disclose more information about income statement expenses upon adoption." This article is the canonical reference for what DISE requires and why it exists. For the compliance calendar and effective date mechanics, see the ASU 2024-03 effective date guide. For the implementation roadmap, see the FASB income statement disaggregation implementation guide.
What Is DISE and Why Did the FASB Create It?
DISE stands for Disaggregation of Income Statement Expenses. It is codified under ASC Subtopic 220-40, a new subtopic created by ASU 2024-03.
The investor case for DISE is straightforward. Most public companies present income statement expenses by function: cost of sales, SG&A, R&D. That tells investors what activity the money funded, but not what kind of resource was consumed. Investors told the FASB they could not reliably assess performance, forecast cash flows, or compare companies across time without knowing how much of that SG&A line is employee compensation versus depreciation versus something else entirely.
As the FASB's project page states, the objective is to help investors:
- Better understand the entity's performance
- Better assess the entity's prospects for future cash flows
- Compare an entity's performance over time and with that of other entities
DISE is the third installment in a FASB transparency trilogy, following ASU 2023-07 on segment reporting and ASU 2023-09 on income tax disclosures. The pattern is deliberate: the FASB is systematically peeling back the aggregation that functional income statement presentation allows.
Who Does DISE Apply To?
DISE applies to all public business entities (PBEs) as defined in the ASC Master Glossary. That definition is broader than most controllers assume.
PwC's In Depth confirms the following entities are in scope:
- All SEC registrants (large accelerated filers, accelerated filers, non-accelerated filers, and small reporting companies)
- Entities whose financial statements are required to be included in another SEC registrant's filing under Regulation S-X Rules 3-05 or 3-09 (acquired businesses and equity method investees)
- Entities with securities traded on an over-the-counter market
- Any entity that meets the ASC Master Glossary PBE definition, even if not an SEC registrant
The following are explicitly excluded:
- Private companies
- Not-for-profit entities
- Employee benefit plans
Key scope trap for pre-IPO companies: A private company does not apply DISE while it remains private. But the moment it files a registration statement (Form S-1), it must apply DISE to the financial statements included in that filing. This catches many IPO candidates off guard. See the Form S-1 filing walkthrough for context on what the registration statement requires.
Entities should also assess whether they could meet the PBE definition in the future, for example through an acquisition by a public company or a planned IPO, and plan accordingly.
What Are the DISE Disclosure Requirements?
DISE requires four distinct disclosure elements at each interim and annual reporting period, all housed in a new tabular footnote. The standard does not change what appears on the face of the income statement.
1. Tabular Disaggregation of Five Natural Expense Categories
For each relevant expense caption on the income statement, entities must disclose the amount of each of the following natural expense categories included in that caption:
| Natural Expense Category | Notes |
|---|---|
| (a) Purchases of inventory | Measured using the expense or cost-incurred approach |
| (b) Employee compensation | All forms of compensation included in the caption |
| (c) Depreciation | Separate from DD&A for oil and gas |
| (d) Intangible asset amortization | Amortization of finite-lived intangibles |
| (e) DD&A from oil-and-gas-producing activities | Or other depletion expense |
A relevant expense caption is any expense line presented on the face of the income statement within continuing operations that contains at least one of these five categories. In practice, cost of sales, SG&A, and R&D will be relevant captions for nearly every PBE. The disaggregation requirement applies to each relevant caption separately, not to a single combined total.
2. Integration of Existing Required Disclosures
Certain amounts already required to be disclosed under existing US GAAP must be pulled into the same tabular format, rather than disclosed separately. Examples include restructuring charges, stock-based compensation (where separately required), impairment losses on intangibles or long-lived assets, and gains or losses from derivative instruments.
This does not create new disclosures. It consolidates existing ones into the DISE table, centralizing expense information for the reader.
3. Qualitative Description of Remaining Amounts
After the five natural categories and any integrated existing disclosures are presented, a residual "other items" amount will remain in each relevant caption. Entities must provide a qualitative description of what those remaining amounts represent.
The standard does not prescribe the level of detail required for this qualitative description, which leaves significant judgment to preparers. This is one of the most actively debated implementation questions. Auditors will scrutinize whether the description is sufficiently informative, and investors will compare qualitative descriptions across peers.
4. Selling Expense Disclosure
At every interim and annual period, entities must disclose the total amount of selling expenses recognized in continuing operations. In annual periods only, entities must also disclose their definition of selling expenses.
The standard does not prescribe what counts as a selling expense. Each entity defines it, which creates peer comparability risk and investor relations exposure. A company that defines selling expenses narrowly will report a lower number than a peer with a broader definition, even if their underlying cost structures are identical. The annual definition disclosure is designed to make those differences visible, but it also means CFOs and IR teams need to think carefully about how they define and communicate this figure.
Key takeaway: The selling expense definition is an entity-specific policy choice that must be disclosed annually and applied consistently. Changing the definition requires recasting prior periods unless impracticable, plus disclosure of the reason for the change.
What Is a Relevant Expense Caption?
A relevant expense caption is any expense line on the face of the income statement, within continuing operations, that contains at least one of the five natural expense categories.
This matters because not every income statement line triggers disaggregation. A line that contains only items outside the five categories (for example, a standalone "loss on extinguishment of debt" line) is not a relevant caption and does not require disaggregation.
For most industrial, technology, consumer, and healthcare companies, cost of sales, SG&A, and R&D will all be relevant captions. For financial services and insurance companies, the picture is more complex: many expense lines may not contain the specified natural categories in the same way, and industry-specific guidance will matter.
The practical implication: before building the DISE table, entities must map every income statement line to determine which captions are relevant. That mapping exercise is itself a significant undertaking for companies with complex or decentralized cost structures.
What DISE Does NOT Change
This point is worth stating clearly because it is frequently misunderstood.
DISE does not alter the face of the income statement. Entities that present expenses by function (cost of sales, SG&A, R&D) may continue to do so. No new line items, subtotals, or captions are required on the income statement itself. All new information appears only in the footnotes, in the new tabular disclosure.
DISE also does not remove or replace any existing US GAAP or SEC disclosure requirements. It adds to them, and in some cases consolidates existing disclosures into the new table.
For companies reporting under IFRS, the parallel standard is IFRS 18, which takes a different approach by restructuring the face of the income statement itself. The IFRS 18 vs. ASU 2024-03 comparison covers the key differences.
When Are DISE Disclosures First Required?
Annual periods: For annual reporting periods beginning after December 15, 2026. For calendar-year filers, that means the FY2027 annual report (the 10-K filed in early 2028).
Interim periods: For interim periods within annual reporting periods beginning after December 15, 2027. For calendar-year filers, that means the Q1 2029 Form 10-Q is the first required interim filing.
Early adoption is permitted for any annual or interim period for which financial statements have not yet been issued.
Transition may be applied either prospectively (to periods after the effective date) or retrospectively (to any or all prior periods presented). Retrospective adoption requires collecting historical data back to FY2025 for calendar-year filers, a data challenge that is rapidly becoming infeasible for entities that have not already started.
The FASB held a public roundtable on May 27, 2026 to assess implementation progress, the most recent public signal of where preparers and investors stand. The roundtable minutes are publicly available and represent the freshest regulatory read on adoption challenges.
For a full breakdown of the compliance calendar, filer-by-filer effective dates, and the early adoption decision framework, see the ASU 2024-03 effective date guide.
Where Does DISE Fit in the US GAAP Disclosure Architecture?
DISE sits inside the income statement reporting standard (ASC 220), not in a standalone topic. The new subtopic, ASC 220-40, sits alongside ASC 220-10 (the existing comprehensive income guidance) and adds footnote disclosure requirements without touching presentation.
The interaction with other standards matters:
- ASC 280 (Segment Reporting): DISE disaggregation is entity-wide, not segment-by-segment. But the data needed to produce DISE disclosures often lives at the segment or business unit level, so segment reporting infrastructure is a natural starting point for the data sourcing exercise.
- SEC MD&A (Item 303): MD&A discussions of expense trends will need to be consistent with the new DISE footnote. A narrative that describes SG&A growth driven by headcount must align with the employee compensation figure now visible in the DISE table.
- ASU 2023-09 (Income Tax Disclosures): Like DISE, ASU 2023-09 requires a new tabular disclosure in the footnotes. Entities implementing both standards simultaneously should look for process and system efficiencies.
- Non-GAAP measures: The ASU 2024-03 non-GAAP disclosure overlap article covers how the new natural expense data intersects with adjusted metrics that companies present outside the financial statements.
The Implementation Reality
Understanding what DISE requires is the easy part. The hard part is sourcing the data.
As Deloitte's implementation guide states: "To prepare the disclosures required by the DISE standard, entities might need underlying data that may not currently be readily available. The nature and extent of new information required are expected to vary by entity and industry. Entities may need to consider using estimates, making changes to their information technology (IT) systems and reporting capabilities, and adjusting processes and controls."
The five natural expense categories sound simple. In practice:
- Purchases of inventory must be tracked by expense caption, not just in total. PwC updated its guidance in November 2025 specifically to clarify inventory purchase classification questions, reflecting how contested this area remains.
- Employee compensation must be allocated across relevant captions (cost of sales, SG&A, R&D), which requires HR and payroll data at a level of functional granularity that many ERP systems do not currently produce.
- Depreciation and amortization are often tracked in fixed asset subledgers that do not map cleanly to income statement captions.
The DISE controls guide covers the ICFR implications in detail. The chart of accounts mapping guide addresses the system and data architecture questions.
FAQ
Does DISE apply to small reporting companies? Yes. The standard applies to all PBEs, including small reporting companies. There is no size-based exemption.
Can we use estimates where exact data is not available? Yes. ASU 2024-03 explicitly permits the use of estimates or other methods that reasonably approximate the required amounts. The standard acknowledges that some entities' systems do not currently track costs at the required level of granularity. Estimates must be documented and will be subject to auditor scrutiny.
Does DISE require disclosure of all expenses, or only the five named categories? Only the five specified natural expense categories must be quantitatively disaggregated. Remaining amounts in each relevant caption are disclosed as an "other items" residual with a qualitative description. Entities may voluntarily provide additional disaggregation beyond what is required.
What happens if a relevant expense caption contains none of the five natural categories? If an expense caption on the face of the income statement contains none of the five specified categories, it is not a relevant expense caption and does not require disaggregation under DISE.
Is the selling expense disclosure required at interim periods? The total amount of selling expenses must be disclosed at every interim and annual period. The definition of selling expenses is required only in annual periods.
Does DISE affect how we present expenses on the income statement face? No. DISE is a footnote disclosure requirement only. The face of the income statement is unchanged. Entities that present expenses by function continue to do so.
Where can I find the authoritative text? The full text of ASU 2024-03 is available on the FASB website. Deloitte explicitly recommends reading the Background Information and Basis for Conclusions section alongside the codified guidance in ASC 220-40 to understand why specific decisions were made.
