Recent news item: CLEVELAND (AP) — Indians outfielder Grady Sizemore is feeling better and will have an MRI on his strained left elbow on Monday.
It has become very commonplace for doctors to order an MRI for patients experiencing pain. According to Radiology Info.com, Magnetic resonance imaging (MRI) is a noninvasive medical test that helps physicians diagnose and treat medical conditions. The website goes on to say, “MR imaging uses a powerful magnetic field, radio frequency pulses and a computer to produce detailed pictures of organs, soft tissues, bone and virtually all other internal body structures. The images can then be examined on a computer monitor, printed or copied to CD.” (see http://www.radiologyinfo.org/en/info.cfm?pg=bodymr)
In a similar fashion, XBRL puts a company’s financial statements under a transformation that exposes detailed pictures of the underlying accounting backing every line item. This information can then be analyzed and compared by computer software to help determine a company’s financial health.
For example, let’s look at a sample line item from the Marathon Oil SEC filing covering the quarter ending September 30, 2008. The form 10-Q has a line on financial statement that reads:
Loss on early extinguishment of debt 120 (nine months ending September 30, 2007, in millions)
When you give that line item the XBRL MRI treatment, computers can extract the XBRL label:
us-gaap:GainsLossesOnExtinguishmentOfDebt
the definition of the item:
Amount represents the difference between the fair value of the payments made and the carrying amount of the debt at the time of its extinguishment.
And the authoritative literature that backs up the accounting decisions:
the reference:
Presentation Reference
Name Accounting Principles Board Opinion (APB)
Number 26
Paragraph 20, 21
Publisher AICPA
Inquiring minds will take a close look at APB 26 for more detail. This examination should yield a much clearer understanding of the basis for reporting the number and therefore yield a better understanding of the financial statement.
Note: Mr. Sizemore returned to full duty with the Cleveland Indians shortly after his MRI.
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