Accounting policy disclosure

An accounting policy note explains principles and methods used to prepare the statements. Saying only that a company follows United States generally accepted accounting principles (US GAAP) does not identify its significant methods.

Distinguish a method from an estimate

Using straight-line depreciation describes a method. An estimated useful life is an input to that method. The equipment's location is a business fact. These can all matter to readers, but they answer different questions.

A useful policy explanation identifies the transactions and method it covers. Check that the company actually applies that method and that the description agrees with the related amounts.

Apple's 2025 Form 10-K illustrates the distinction. Its inventory disclosure identifies FIFO as the cost-assignment method. FIFO is the policy. The disclosed policy does not prove the physical order in which units left a warehouse, nor does it establish that every inventory item was measured correctly.

NIKE's 2026 property and equipment disclosure requires several kinds of information to be read separately. The measurement basis and depreciation method are policies. Useful-life ranges are estimate information used with the method. The net property, plant, and equipment amount is a reported balance. The note connects these ideas, but they do not become one type of accounting information merely because they appear together.

Recheck copied language

Compare prior wording with current transactions, methods, and requirements. Retain accurate explanations and revise stale ones. A discontinued transaction may still matter to comparative periods, so do not delete its policy solely because it does not occur this year.

ASC 235-10-50-3 requires the note to identify the principles and methods that materially affect the statements. Transaction-specific Topics can require more information. A generic policy paragraph is not a substitute for that work.