Monday, July 9, 2012

Negation Made Simple

By: Nathan Summers, Software Engineer
CompSci Resources, LLC

One aspect of XBRL that seems to perplex many people who generate XBRL exhibits is negation.  While to many accountants negation may seem wildly mystifying, it is an idea that every accountant tacitly understands.  Previous to XBRL, the term negation was rarely (if ever) used in accounting circles, however its utilization was widespread.  In preparation for the new influx of companies completing their first detailed tagging, let's take a time out to demystify the role of negation in XBRL.

XBRL concepts are generally defined so that the vast majority of numbers should be positive.  This is in order to make the utilization of these numbers much easier.  Being a computer-readable language, XBRL is limited in its ability to interpret numbers as positive or negative, as the human mind will naturally do.  For example, on a financial statement, if you see Net Loss followed by a positive number, the human mind will immediately realize this as a negative number (since the label itself implies negativity).  However, with XBRL, this line item would be assigned the concept "us-gaap:ProfitLoss".  If this concept was followed by a positive number, a computer reading this line item would incorrectly interpret its value as being a profit instead of a loss.  Thus, the preparer needs to explicitly tell the computer that this concept actually represents a negative number, since the computer lacks the ability to interpret this on its own.