How does XBRL work?

XBRL is a standard for the electronic exchange of data between businesses and on the internet. Under XML, identifying tags are applied to items of data so that they can be processed efficiently by computer software. It enables unique identifying tags to be applied to items of financial data. XBRL allows labels in any language to be applied to items, as well as accounting references or other subsidiary information.

With the help of two documents :Taxonomy and Instance document, XBRL makes the data readable. Taxonomy is the elements and their relationships based on the regulatory requirements. Using the taxonomy prescribed by the regulators, companies need to match the concepts which are reported by the companies to the corresponding element in taxonomy, in their reports, and generate a valid XBRL instance document.  

Financial statement in XBRL can be created in a number of ways :

• XBRL-aware accounting software products are available which will support the export of data in XBRL form.

• Statements can be mapped into XBRL using XBRL software tools designed for this purpose

• Data from accounting databases can be extracted in XBRL format.

• Applications can transform data in particular formats into XBRL. The route which an individual company may take will depend on its requirements and the accounting software and systems it currently uses.