F1 - Income Statement Flashcards
What is the presentation order of the major components of an income statement and statement of retained earnings?
IDEA:
I - Income (Loss) from Continuing Operations
D - Discontinued Operations Income (Loss)
E - Extraordinary Items
A - Accounting Principle Change
What is included in inventory costs?
Purchase price, freight in
What is included in selling expense?
Freight out, salaries and commissions, advertising
What is included in general & administrative costs?
Officer’s salaries, accounting and legal, insurance
What is included in non-operating expenses?
Auxiliary activities, interest expense from other activities
Under US GAAP, what is a component of an entity?
OR RAGS: O - operating segment R - reportable segment R - reporting unit AG - asset group S - subsidiary
Under IFRS, what is a component of an entity?
MLB/GA or SFS:
MLB - major line of business
GA - geographical area
SFS - subsidiary for sale
Management should believe that a component will sell within how long from the time the plan to sell is initiated?
One year
T/F : Components may be fair valued above amounts previously impaired
False. The gains cannot exceed the amount for which the component has been impaired
T/F : If the component is determined to be held for sale in December, the income (loss) for the entire year is included in income (loss) from discontinued operations
True. The component is considered discontinued the for the entire year, no matter when it is determined to be held for sale
Define directly related in terms of discontinued operations
1) has a cause-effect relationship
2) occurs no later than one year from disposal
What are the criteria for liability recognition for disposal activities?
OPA:
O - obligating event has occurred
P - payment of obligation is required
A - avoidance of payment is not possible
Questions to answer in notes about component disposal:
Why its being done
How much it will cost
What it has cost to date
How long it will take
Under US GAAP, an extraordinary item is defined as:
Unusual in nature AND infrequent in occurance
Under IFRS, an extraordinary item is defined as:
No extraordinary items under IFRS
