What Does eXtensible Business Reporting Language Mean?
eXtensible Business Reporting Language is a standard that was developed to improve the way in which financial data is communicated, making it easier to compile and share this data. eXtensible Business Reporting Language (XBRL) is a type of XML (extensible markup language), which is a specification that is used for organizing and defining data. XBRL uses tags to identify each piece of financial data, which then allows it to be used programmatically by an XBRL-compatible program. XBRL allows for easy transmission of data between businesses.
Understanding eXtensible Business Reporting Language (XBRL)
Imagine that you are looking at a company's financial statements online on the company's website. Traditionally, these statements would simply be in plain text. If you wanted to put these numbers into a spreadsheet file to run analysis on the statements, you would have to either manually type or copy and paste each account and corresponding number into the spreadsheet. However, if the data on the site was available in eXtensible Business Reporting Language (XBRL), you could simply convert this data from the website into a spreadsheet program (usually instantaneously) that is XBRL compatible.
Due to the standardized nature of the identification tags and the language itself, financial data from one country, which has set accounting standards such as U.S. GAAP, can be easily compiled into the accepted accounting standards of another country even if they are drastically different. The reporting of financial data in XBRL is not required by all companies, but because it has become prevalent, it has been suggested that it won't be long before all companies will have to report their financial data in this language.