F1- Income Statement Flashcards
What are unexpired Costs?
Costs that will expire in future periods and be charged against revenues from future periods.
What is reported at gross amounts and net amounts?
Gross=Revenues & Expenses
Net=Gains & Losses
What are gains and losses?
A gain is the recognition of an asset either not in the oridnary course of business or without incurrence of an expense.
A loss is cost expiration either not in the ordinary course of business or without generation of revenue.
What is the presentation order and Major components of the Income Statement?
IDEA
Income or Loss from Continuing Operations (reported pre-tax)
Income or Loss from Discontinued Operations (presented after tax, net of tax)
Etraordinary Items (After tax)
Cumulative effect of change in Accounting Principle (also net of tax)- For changes from GAAP to GAAP
Under US GAAP, what qualifies as a component of an entity?
Operations and cash flows can be clearly distinguished, both operationally and for financial reporting purpses, from the rest of the entity.
Examples could be: an operating segment, a reportable segment, a reporting unit, a subsidiary, or an asset group.
Under IFRS, what is a component of an entity?
2 requirements:
1) A separate major line of business or geographical area of operations
2) A subsidiary acquired exclusively with a view to resale
What criteria must be met for a component to be classified as held for sale?
1) Management commits to a plan to sell the component
2) The component is available for immediate sale in its present condition
3) An active program to locate a buyer has been initiated
4) The sale of the component is probable and expected to complete within one year
5) It is being actively marketed
6) It is unlikely that significant changes to the plan wil be made or that the plan will be withdrawn.
What is unique about IFRS when compared to US GAAP in regards to a held for sale component?
For IFRS, before a component can be classifed as held for sale, the individual assets and liabilities of the component must be remeasured in accordance with applicable standards.
For US GAAP, the A&L’s must not be remeasured, but impairment analysis is done before it is classfied as held for sale.
When will a company report a components results as part of discontinued operations?
When it has been disposed of, or classified as held for sale.
What conditions must be met for a component that has been disposed of classifed as held for sale to be reported as part of discontinued operations?
The operations and cash flows of the component have been eliminated from ongoing operations.
AND
The entity will have no signficant continuing involvement with the component after the disposal.
What items are included in the Results of Discontinued Operations?
1) Results of operations of th component
2) Gain or loss on disposal of the component
3) Impairment loss (or increase in fair value) of the component.
Are assets within a component held for sale depreciated or amortized?
NO
What criteria must be met for a liability associated with an exit or disposal activity to be recognized?
A committment to a plan to exit or disposal is not enough to result in liability recognition.
1) An obligating even has occurred
2) The event results in a present obligation to transfer assets (payment) to provide services in the future
3) Entity has little or no discretion to avoid the future transfer of assets or providing of services
When are the Future operating losses expected be incurred as a part of an exit or disposal activity recognized?
In the period incurred.
Under US GAAP, what type of transactions and other events are considered Extraordinary Items (reported net of tax)?
1) Material in Nature
2) Of a characteristic Significantly different from the typical or customary business activities.
3) Not expectd to recur in the forseeable future AND Infrequent
4) Not normally considered in evaluating the ordinary operating results fo the enterprise.
